the investors are advised in their own interest to ... · court, dr. ziauddin ahmed road, karachi,...

Risk Disclaimer: All Investments in Islamic mutual Funds aresubject to market risks. The NAV of Units may go down or upbased on the market conditions. The investors are advised intheir own interest to carefully read the contents of the OfferingDocument, in particular the Investment Policies mentioned inClause 3.2, Risk Factors mentioned in clause 3.5, TaxationPolicies mentioned in Clause 8 and Warnings in Clause 10 beforemaking any investment decision.

OFFERING DOCUMENT OF

First Habib Islamic Income Fund (FHIIF)(SHARI’AH COMPLIANT Wakalatul Istithmar based fund)

(Open End Islamic IncomeScheme)

MANAGED BY

Habib Asset Management Limited

Vetted by

Mufti Ismatullah

(Sharia Advisor of Bank Al Habib Limited, First Habib Islamic Balanced Fund, Pak Qatar Family Takaful andPak Qatar General Takaful)

First Habib Islamic Income Fund

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Table of Contents

PART 1: REGULATORY APPROVAL AND CONSENT .......................................................................... 41.1 APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN ............. 41.2 OFFERING DOCUMENT ……................................................................................................. 41.3 FILING OF THE OFFERING DOCUMENT............................................................................... 5PART 2: CONSTITUTION OF THE SCHEME ....................................................................................... 52.1 CONSTITUTION ...................................................................................................................... 52.2 TRUST DEED………....................................................................................................................... 52.3 MODIFICATION OF TRUST DEED………………..................................................................... 62.4 DURATION…………………………….. .................................................................................... 62.5 TRUST PROPERTY…………..................................................................................................... 62.6 INITIAL OFFER AND INITIAL PERIOD……………………………................................................ 62.7 TRANSACTION IN UNITS AFTER INITIAL OFFERING PERIOD……………………………………. 62.8 OFFERING DOCUMENT ……................................................................................................. 62.9 MODIFICATION OF OFFERING DOCUMENT….................................................................... 62.10 RESPONSIBILITY OF THE MANAGEMENT COMPANY FOR INFORMATION GIVEN IN THIS

DOCUMENT........................................................................................................................... 7PART 3: INVESTMENT OBJECTIVES, INVESTMENT POLICY, RESTRICTIONS, RISK DISCLOSURE

AND DISCLAIMER…………………..…………………………………………………………....... 73.1 INVESTMENT OBJECTIVE........................................................ ............................... 73.2 INVESTMENT POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73.3 CHANGE IN INVESTMENT POLICY ……............................................................................. 93.4 INVESTMENT RESTRICTIONS …........................................................................................... 93.5 RISK DISCLOSURE................................................................................................................ 123.6 DISCLAIMER................................................................................ ................................ 14PART 4: OPERATORS AND PRINCIPALS……….............................................................................. 154.1 MANAGEMENT COMPANY ................................................................................................ 154.2 PRINCIPAL SHAREHOLDERS................................................................................................ 154.3 BOARD OF DIRECTORS AND MANAGEMENT ................................................................. 154.4 PERFORMANCE OF LISTED ASSOCIATED COMPANIES AND FUNDS UNDER

MANAGEMENT…………………………………………………………………………………… 184.5 ROLE AND RESPONSIBILITIES OF THE MANAGEMENT COMPANY.................................. 194.6 MAINTENANCE OF UNIT HOLDERS REGISTER….. ….......................................................... 214.7 ROLE OF THE TRUSTEE………………………………………………………………………….. 214.8 SHARIAH ADVISOR……………………………………………………………………………… 234.9 TRANSFER AGENT…………………..................................................................................... 244.10 CUSTODIAN…………………… .......................................................................................... 244.11 DISTRIBUTORS/FACILITATORS………………………............................................................ 244.12 AUDITORS........................................................................................................................... 254.13 LEGAL ADVISORS ..................................................................................... ......................... 254.14 BANKERS…………................................................................... .............................. 254.15 RATING OF THE SCHEME………………………………………………………………………. 264.16 MINIMUM FUND SIZE………………………………………………………………………...... 26PART 5: CHARACTERISTICS OF UNITS........................................................................................... 275.1 UNITS……………………………………. .............................................................................. 275.2 CLASSES OF UNITS ………………………………………………………................................. 275.3 TYPES OF UNITS ………………………………………………………..................................... 275.4 PURCHASE AND REDEMPTION OF UNITS…………………............................................... 285.5 PROCEDURE FOR PURCHASE OF UNITS………………………………………………… 295.6 PROCEDURE FOR REDEMPTION OF UNITS..................................................................... 335.7 PURCHASE (PUBLIC OFFER) AND REPURCHASE (REPURCHASE) OF UNITS

OUTSIDE PAKISTAN ……………………………………………………………………………………………….. 355.8 DETERMINATION OF REDEMPTION (REPURCHASER) PRICE............................................................................... 355.9 PROCEDURE FOR REQUESTING CHANGE IN UNIT HOLDER PARTICULARS................... 365.10 PARTIAL TRANSFER……………………...................................... ............................. 385.11 PROCEDURE FOR PLEDGE / LIEN / CHARGE OF UNITS................................................... 385.12 TEMPORARY CHANGE IN METHOD OF DEALING, SUSPENSION OF DEALING AND QUEUESYSTEM…………………………………………………………………………………….................................. 39PART 6: DISTRIBUTION POLICY........................................................................................................................ 406.1 DECLARATION OF DIVIDEND ............................................................................................ 406.2 DETERMINATION OF DISTRIBUTABLE INCOME………....................................................... 406.3 PAYMENT OF DIVIDEND………………………..………....................................................... 406.4 DISPATCH OF DIVIDEND ADVICE .......................................................................................................................... 416.5 REINVESTMENT OF DIVIDEND……….................................................................................. 416.6 BONUS UNITS…………….……............................................................................................. 416.7 ENCASHMENT OF BONUS UNITS…….................................................................................. 41


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6.8 CLOSURE OF REGISTER........................................................ ............................... 41PART 7: FEES AND CHARGES........................................................................................................... 417.1 FEES AND CHARGES PAYABLE BY AN INVESTOR…………............................................... 417.2 FEES AND CHARGES PAYABLE BY THE FUND……………….............................................. 437.3 FORMATION COST………………. ...................................................................................... 437.4 OTHER COSTS AND EXPENSES…………… .......................................................................... 43PART 8: TAXATION AND ZAKAT...................................................................................................... 448.1 TAXATION ON THE INCOME OF THE FUND........................................................................ 448.2 WITHHOLDING TAX ............................................................................................................. 448.3 ZAKAT ON FUND.................................................................................................................. 458.4 TAXATION AND ZAKAT ON UNIT HOLDER ………………................................................... 458.5 DISCLAIMER………………………………….……………….................................................... 45PART 9: REPORTS TO UNIT HOLDERS............................................................................................... 459.1 ACCOUNT STATEMENT…. ................................................................................................... 459.2 FINANCIAL REPORTING……. ............................................................................................. 469.3 TRUST REPORT…………………… …..................................................................................... 469.4 FUND MANAGER REPORT................................................................................................... . 46PART 10 – WARNING AND DISCLAIMER…………………………………….......................................... 4610.1 WARNING………………....................................................................................................... 4610.2 DISCLAIMER……………....................................................................................................... 46PART 11 – GENERAL INFORMATION…………………………………………......................................... 4711.1 ACCOUNTING PERIOD / FINANCIAL YEAR OF THE FUND………….................................. 4711.2 INSPECTION OF CONSTITUTIVE DOCUMENTS…………….………….................................... 4711.3 TRANSFER OF MANAGEMENT RIGHTS OF THE FUND…………….…................................... 4711.4 EXTINGUISHMENT/REVOCATION OF THE FUND….…................................................................ 4711.5 PROCEDURE AND MANNER OF RECOVATION OF THE FUND….….................................... 4811.6 DISTRIBUTION OF PROCEEDS ON TERMINATION ………………...…..................................... 48PART 12: GLOSSARY ...................................................................................................................... 48ANNEXURE A …............................................................................................................................. .... 54ANNEXURE B.............................................................................................................................................. 55ANNEXURE C .................................................................................................................................... 56


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OFFERING DOCUMENT OF

First Habib Islamic Income Fund (FHIIF)Wakalatul Istithmar based fund

MANAGED BY


An Asset Management Company Registered under the Non-Banking FinanceCompanies (Establishment and Regulation) Rules, 2003

Date of Publication of Offering Document DatedDecember __, 2016

Initial Offering Period from December __, 2016 to December__, 2016 (both days inclusive)

The First Habib Islamic Income Fund (the Fund/the Scheme/the Trust/the Unit Trust/FHIIF)has been established through a Trust Deed (the Deed) dated August 30, 2016, underthe Trusts Act, 1882 entered into and between Habib Asset Management Limited, theManagement Company, and Central Depository Company of Pakistan Limited, theTrustee..

PART I: REGULATORY APPROVAL AND CONSENT

1.1 Approval of the Securities and Exchange Commission of PakistanThe Securities and Exchange Commission of Pakistan (SECP) has authorized the offerof Units of First Habib Islamic Income Fund (FHIIF) and registered it as a notified entityunder the Non- Banking Finance Companies and Notified Entities Regulations 2008(“Regulations”) vide letter No SCD/AMCW/HAML/265/2016 dated October 27, 2016.SECP has approved this Offering Document; under the Regulations vide No 54(1).

It must be clearly understood that in giving this approval, SECP does not take anyresponsibility for the financial soundness of the Fund nor for the accuracy of anystatement made or any opinion expressed in this Offering Document.

1.2. Offering DocumentThis Offering Document sets out the arrangements covering the basic structure of theFirst Habib Islamic Income Fund (the “Fund”, the “Scheme”). It sets forth informationabout the Fund that a prospective investor should know before investing in any class ofUnit of the Fund. The provisions of the Trust Deed, the Rules, the Regulations, theShari’ah Guidelines, the Shari’ah Compliance regulatory provisions that may be issuedfrom time to time, circulars, directives etc. as specified hereafter govern this OfferingDocument.

This document has been reviewed and vetted by the Mufti Ismatullah.

All Investments of the Fund shall be in adherence to the principles of Shari’ah.

It is possible that adherence to the principles of Shari’ah will cause the Fund to performdifferently from Funds with similar objectives, but that are not subject to the requirementsof Shari’ah.)

If prospective investor has any doubt about the contents of this Offering Document,he/she/it should consult one or more from amongst their investment advisers, legaladvisers, Shari’ah Advisor / Scholar, bank managers, stockbrokers, or financial advisersto seek independent professional advice.

Investors must recognize that the investments involve varying levels of risk. The portfolio


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of the Fund consists of investments, listed as well as unlisted (other than equity funds)that are subject to market fluctuations and risks inherent in all such investments. Neitherthe value of the Units in the Fund nor the dividend declared by the Fund is, or can be,assured. Investors are requested to read the Risk Disclosure and Warnings statementcontained in Clause 3 .5 and Clause 10 respectively in this Offering Document.

1.3 Filing of the Offering DocumentThe Management Company has filed a copy of the Offering Document signed by theChief Executive along with the Trust Deed with SECP. Copies of the following documentscan be inspected at the registered office of the Management Company or the placeof business of the Trustee:

(1) License No. AMCW/07/HAML/AMS/04/2014 dated May 15, 2014 granted by SECPto Habib Asset Management Limited to carry out Asset Management Services;

(2) SECP’s Letter No. SCD/AMCW/HAML/115/2016 dated A u g u s t 2 2 , 2016approv ing the app oint men t of C e n t r a l Depository Company of PakistanLimited as the Trustee of the Fund;

(3) Trust Deed (the Deed) of the Fund;

(4) SECP’s Letter No. SCD/AMCW/HAML/265/2016 dated October 27, 2016 registeringthe Fund in terms of Regulation 44 of the NBFC and Notified Entities Regulations 2008;

(5) Letters No. K A - A Q 2 7 0 dated August 30, 2016 from KPMG, Taseer Hadi Khalid &Co., Chartered Accountants., Auditors of the Fund, consenting to the issue ofstatements and reports;

(6) Letters No. IM681/HAML/01/2016 dated November 09, 2016 from Mohsin Tayebaly& Co., Legal Advisers of the Fund, consenting to act as adviser;

(7) SECP’s letter No. SCD/AMCW/FHIIF/__/2016 dated November __, 2016 approving thisOffering Document.

2. CONSTITUTION OF THE SCHEME

2.1 ConstitutionThe Fund is an open-end Fund and has been constituted by a Trust Deed entered into atKarachi on August 30, 2016 between:

Habib Asset Management Limited, a Non-Banking Finance Company incorporatedunder the Companies Ordinance 1984 and licensed by SECP to undertake assetmanagement services, with its principal place of business at 1 s t F loor , Imper ialCourt, Dr. Ziauddin Ahmed Road, Karachi, Pakistan, as the Management Company;and

Central Depository Company of Pakistan Limited, a company incorporated under theCompanies Ordinance, 1984, and registered by SECP to act as a Trustee of a CollectiveInvestment Scheme, having its registered office at CDC House, 99-B Block 'B' S.M.C.H.S.,Main Shahrah-e-Faisal, Karachi, as the Trustee.

2.2 Trust Deed (the “Deed”)The Deed is subject to and governed by the Non-Banking Finance Companies(Establishment and Regulations) Rules, 2003 and Non-Banking Finance Companiesand Notified Entities Regulations, 2008, Securities and Exchange Ordinance 1969,Companies Ordinance 1984 and all other applicable laws and regulations. The termsand conditions in the Deed and any supplemental deed(s) shall be binding on eachUnit Holder. In the event of any conflict between the Offering Document and theDeed the latter shall supersede and prevail over the provisions contained in thisOffering Document. In the event of any conflict between the Deed and the Rules orRegulations and Circulars issued by SECP, the latter shall s u p e r s e d e and prevailover the provisions contained in the Deed.

Furthermore, all Investments of the Trust Property shall be in accordance with the


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principles of Shari’ah as advised by Shariah Advisor. The fund shall also subject to therules and the regulations framed by the State Bank of Pakistan with regard to the foreigninvestments made by the Fund and investments made in the Fund from outside Pakistanin foreign currency.

2.3 Modification of Trust DeedThe Trustee and the Management Company, acting together and with the approval ofSECP, shall be entitled by supplemental deed(s) to modify, alter or add to the provisionsof the Deed to such extent as may be required to ensure compliance with anyapplicable laws, Rules and Regulations and Shari’ah guidelines.

Where the Deed has been altered or supplemented, the Management Company shallduly notify to the Unit Holders and posted on their official website.

2.4 DurationThe Duration of the Fund is perpetual. However, SECP or the Management Companymay wind it up or revoke the fund, on the occurrence of certain events as specified inthe Regulations or Clause 11.4 of this Document.

2.5 Trust propertyThe aggregate proceeds of all Units issued from time to time after deducting Duties andCharges, Transactions Costs & applicable sale load shall constitute part of the TrustProperty and includes the Investment and all income, profit and other benefits arisingthere from and all cash, bank balances and other assets and property of everydescription for the time being held or deemed to be held upon trust by the Trustee forthe benefit of the Unit Holder(s) pursuant to the Deed but does not include any amountpayable to the Unit Holders as distribution. However any profit earned on the amountpayable to the Unit Holders as distribution shall become part of the Trust Property.

2.6 Initial Offer and Initial PeriodInitial Offer is made during the Initial Period which will be Five (5) Business Days andbegins at the start of the banking hours on October __, 2016 and shall end at the close ofthe banking hours on October __, 2016. During the Initial Offering period, the Units shall beissued at the Initial Price of Rs.100 per Unit and subsequently at the price calculated andannounced by the Management Company for every Dealing Day.

2.7 Transaction in Units after Initial Offering PeriodSubsequently the Public Offering will be made at the Offer Price and redeemed at theRedemption Price. The Management Company will fix the Offer (Purchase) andRedemption (Repurchase) Prices for every Dealing Day on the basis of the Net AssetValue (NAV). The NAV based price shall be fixed after adjusting sales load (if any) andany Transaction Costs that may be applicable. Except for circumstances elaborated inClause 5.11 & 11.4 of this Offering Document, such prices shall be applicable toPurchase and Redemption requests, complete in all respects, received during theBusiness Hours on the Dealing Day.

2.8 Offering DocumentThe provisions of the Trust Deed, the Rules, the Regulations, circulars and the Directiveissued by the Commission govern this Offering Document. It sets forth information aboutthe Fund that a prospective investor should know before Investing in any Unit.Prospective investors in their own interest are advised to carefully read thisOffering Document to understand the Investment Policy, Risk Factors and Warningand Disclaimer and should also consult their legal, financial and/or other professionaladviser before investing.

2.9 Modification of Offering DocumentThis Offering Document will be updated to take account of any relevant materialchanges relating to the Fund. Such changes shall be subject to prior consent of theTrustee and approval from the Securities and Exchange Commission of Pakistan (SECP)and shall be circulated to all Unit Holders and/ or publicly notified by advertisements in


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the newspapers subject to the provisions of the Rules and the Regulations and dulyp o s t e d on official website of the Management Company.

2.10 Responsibility of the Management Company for information given in thisDocument

Management Company accepts the responsibility for the information contained in thisOffering Document as being accurate at the date of its publication.

3. INVESTMENT OBJECTIVES, INVESTMENT POLICY, RESTRICTIONS, RISK DISCLOSURE ANDDISCLAIMER3.1 Investment ObjectiveThe primary objective of FHIIF is to provide competitive risk adjusted returns to its investorsby investing in a diversified portfolio of long, medium and short term Shariah Compliantinstruments while taking into account liquidity considerations.

3.2 Investment PolicyHabib Asset Management Limited shall manage the Fund on purely Shariahcompliance basis by investing in designated Authorized Investments approved by theShariah Advisory and thus providing Shariah compliant returns to the investors of theFund. Hence no portion of the Fund property shall be invested in any investmentwhich as per the opinion of Shariah Advisory is non Shariah compliant.

First Habib Islamic Income Fund in line with its Investment Objectives will invest inAuthorized Investments.

Authorized Investments

Asset Class EntityRating

InstrumentRating

Exposure Limit(% of NAV)

1. Shariah Compliant GovernmentSecurities with maturity equal to andgreater than 90 days.

N/A N/A 0 - 75%

2. Shariah Compliant GovernmentSecurities of less than 90 daysmaturity and Cash in Bank Accounts(excluding term deposits) withlicensed Islamic Banks and licensedIslamic Banking windows ofconventional Banks

A- N/A

25 - 100%

(25% shall becalculated onthe basis of theaverage foreach calendarmonth)

3. MTS and Spread Transactions asapproved by the Shariah Advisor ineligible securities as declared by theStock Exchanges and the SECP/Shariah Advisory Board;

N/A N/A 0 - 40%

4. Secured and Unsecured (listedand/or privately placed) Sukuks

A- A-0 - 75%

5. Shariah Compliant non-tradedsecurities with maturity of less thanand equal to six (6) monthsincluding but not limited to BankDeposits with licensed Islamic Banksand licensed Islamic Banking

A A 0 - 75%


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windows of conventional Banks andPlacement of funds underMudarabah, Murabaha,Musharakahs, Istisna’a and Ijaraharrangements with banks, NBFCs,Mudarabahs and DFIs

6. Shariah Compliant non-tradedsecurities with maturity exceedingsix (6) months including but notlimited to Bank Deposits withlicensed Islamic Banks and licensedIslamic Banking windows ofconventional Banks and Placementof funds under Mudarabah,Murabaha, Musharakahs, Istisna’aand Ijarah arrangements withbanks, NBFCs, Mudarabahs and DFIs

A- A- 0 - 15%

7. Authorized shariah compliantinvestments in overseas marketsincluding Islamic Mutual Funds.Overseas investments would besubject to prior approvals/guidelinesof SECP and SBP.

A- A-

0-30% (Subjectto a cap ofUSD15 million)

8. Any other Shariah Compliantinstrument / securities that may beallowed by the SECP from time totime and is in accordance with theguidelines of Shariah Advisor of theScheme.

A- A-

As may beallowed by theCommission

The investment in asset classes mentioned above will be subject to such Exposure limitsand minimum ratings as specified herein and/or otherwise as specified in the Regulations/Directives/ Circulars.

3.2.1 BenchmarkThe performance of the Fund shall be compared against a benchmark based on six (6)months average deposit rates of three (3) A rated scheduled Islamic Banks or Islamicwindows of conventional Banks as selected by MUFAP.

3.2.2. Shari’ah Investment GuidelinesThe Fund must at all times and all stages of its operation comply with Shari’ah principles.

The Fund must be raised, operated, and finally redeemed by the investor on the basis ofthe contracts which are acceptable in Shari’ah .

The banking facilities and short-term money market instruments used for the Fund has tobe those which comply with Shari’ah principles.

For securities listed on the All share Islamic index the Funds’ investments must be strictlyconfined to the Shari’ah compliant securities.

3.2.3 Management Company Can Alter Investment Mix


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The Management Company can from time to time alter the weightings, subject to thespecified limits as per Clause 3.2 above, between the various types of investments if it isof the view that market conditions so warrant. The Funds not invested in the foregoingavenues shall be placed as deposit with scheduled banks.

3.3 Changes in Investment PolicyThe investment policy will be governed by the Regulations and/or SECP directives. AnyFundamental change in the Investment Policy will be implemented only after obtainingprior approval from SECP/Shariah Advisory Board and giving 90 days prior notice tothe Unit Holders as specified in the regulation.

3.4 Investment Restrictions(a) The Trust Property shall be subject to such exposure limits or other prohibitions as areprovided in the Regulations, Trust Deed, this Offering Document of the Fund, circularsand directives and shall also be subject to any exemptions that may be specificallygiven to the Fund by SECP and are explicitly mentioned under the heading Exceptionsto Investment Restriction in this offering document or subsequently in writing. If and solong as the value of the holding in a particular company or sector shall exceed the limitimposed by the Regulations, the Management Company shall not purchase any furtherInvestments in such company or sector. In the event Exposure limits are exceeded dueto corporate actions including taking up rights or bonus issue and/or owing toappreciation or depreciation in value of any Investment, disposal of any Investment orRedemption of Units, the excess exposure shall be regularized in such manner and withinsuch time as specified in the Regulations, circular or notification issued by SECP fromtime to time.

(b) The Management Company, on behalf of the Fund, shall not enter into transactionswith any broker that exceeds the limit provided in the Regulations and or circulars andnotifications issued by the Commission from time to time.

Transactions relating to money market instruments and Islamic debt securities do not fallunder this clause.

(c) The Management Company on behalf of the Scheme shall not:

i. Make Investments in Non-Shariah compliant instruments andagainst the guidelines of Shariah Advisor of the Fund.

ii. Purchase or sell -a. Bearer securities;b. Real estate, commodities or commodity contracts;c. Securities which result in assumption of unlimited liability

(actual or contingent);d. Anything other than Authorized Investments as defined herein;

iii. Participate in a joint account with others in any transaction;

iv. Take direct exposure to equities;

v. Affect a short sale in a security whether listed or unlisted;

vi. Purchase any security in a non Shariah compliant forward andfuture contract;

vii Take Exposure in any other Collective Investment Scheme;

viii. Lend, assume, guarantee, endorse or otherwise become directlyor contingently liable for or in connection with any obligation orindebtedness of any person as specified in the Regulation;

ix. Make any investment which will vest the Management Company


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or its group with the management or control of the affairs of the investeecompany;

x. invest in securities of the Management Company;

xi. issue a senior security which is either stock or represents indebtedness,without the prior written approval of the Commission;

xii apply for de-listing from stock exchange, unless it has obtained priorwritten approval of the Commission;

xiii. sell or issue Units for consideration other than cash unless permitted by theCommission on the basis of structure and investment policy of the Scheme;

-xiv. Merge with, acquire or take over any scheme, unless it has obtained theprior approval of the SECP in writing to the scheme of such merger,acquisition or take over;

xv. invest the subscription money until the closure of initial offering period;

xvi. enter on behalf of the Scheme, into underwriting or sub- underwritingcontracts.

xvii. subscribe to an issue underwritten, co-underwritten or sub- underwrittenby group companies of the Management Company.

xviii. pledge any of the securities held or beneficially owned by thescheme except as allowed under the Regulations.

xix. accept deposits.

xx. make a loan or advance money to any person from the assets of theScheme.

(d) The Management Company, on behalf of the Scheme, shall not take Exposure of more thanthirty five per cent (35%) of the total Net Assets of the Scheme in any single group. For this purpose,“group” means persons having at least thirty per cent (30%) common directors or 30% or moreshareholding in any other company, as per publicly disclosed information

(e) The investment in issued Islamic debt securities of a company shall not, at any time, exceed anamount equal to fifteen per cent (15%) of total Net Assets of the Scheme or fifteen per cent (15%)of that single issue, whichever is lower. In all other cases the exposure limit as specified in RegulationNo. 55(5) and (6) of the Regulations shall prevail.

(f) The Management Company shall not invest more than thirty five per cent (35%) of total NetAssets of the Scheme in securities of any one sector as per classification of the stock exchange

(g) Where the Exposure of the Scheme exceeds the limits specified in sub-clause (d) and (e) abovebecause of corporate actions or due to market price increase or decrease in Net Assets of theScheme, the excess Exposure shall be regularized within Four (4) months of the breach of limitsunless the said period of four (4) months is extended by the Commission on an application by theManagement Company

(h) The Management Company, on behalf of the Scheme, shall not take Exposure of more than tenper cent (10%) of the total Net Assets of the Scheme in listed group companies of the ManagementCompany and such Exposure shall only be made through the secondary market________________________________________________________________________________________________

1. Substituted vide 1st Supplement dated October 31, 2017. Before change point read as (e) Theinvestment in issued Islamic debt securities of a company shall not, at any time, exceed an amountequal to fifteen per cent (15%) of total Net Assets of the Scheme or fifteen per cent (15%) of thatsingle issue, whichever is lower. In all other cases the exposure limit of ten per cent (10%) asspecified in Regulation No. 55(5) of the Regulations shall prevail.


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(i) Rating of any bank or DFI with which funds of the Scheme are placed shallnot be lower than A.

(ii) Rating of Shariah Compliant debt instruments in the portfolio of the Schemeshall not lower than A.

(i) Rating of any NBFC and Modaraba with which Funds are placed shall not be lowerthan A.

(j) Weighted average time to maturity of net assets in I s lamic debt/money marketsecurities shall not exceed 4 years excluding Shariah Compliant Government Securities.

(k)In case of redemptions requests are pending due to constraint of liquidity in the Fund,for more than the period as stipulated in the Regulations, the Management Companyshall not make any fresh investment or rollover of any investment.

(l) The Scheme shall invest at least twenty five per cent (25%) of the Net Assets in cashand near cash instruments which include cash in bank account (excluding TDRs) andShariah Compliant Government Securities not exceeding ninety (90) days to maturity.This minimum cash and near cash requirements shall be calculated on the basis of theaverage for each calendar month

(m) There shall be no restriction regarding time to maturity of any single asset and durationof a single security in the portfolio of the Scheme.

(n) The Scheme shall not invest more than fifteen per cent (15%) of the Net Assets in non-traded securities including Reverse Repo, Bank Deposits, Certificates of Investments,Certificates of Musharakas and anything over six (6) months maturity which is not amarketable security.

(o) Exposure to MTS and Spreads transactions shall not exceed forty per cent (40%) of theNet Assets of the Scheme.

Exemption to Investment RestrictionsIn order to protect the right of the Unit Holders, the Management Company may takean Exposure in any Shari’ah compliant unauthorized investment due to recovery of anydefault proceeding of any counter party of any Authorized Investment with theapproval of the Commission.

3.4.1 S h a r i ’ a h c o m p l i a n t Financing Arrangements(a)Subject to any statutory requirements for the time being in force and to the termsand conditions herein contained, the Management Company may arrange Shari’ahcompliant financing for account of the Scheme, with the approval of the Trustee, fromBanks, Financial Institutions, or such other companies as specified by the Commissionfrom time to time. The financing , however, shall not be resorted to, except for meetingthe redemption requests and shall be repayable within a period of ninety daysand such financing shall not exceed fifteen (15) percent of the net Assets or suchother limit as specified by the Commission of the scheme at the time of financing.

If subsequent to such financing, the Net Assets are reduced as a result of depreciationin the market value of the Trust Property or redemption of Units, the ManagementCompany shall not be under any obligation to reduce such shariah compliantborrowing.

(b)Neither the Trustee, nor the Management Company shall be required to issue anyguarantee or provide security over their own assets for securing such financings frombanks, financial institutions and non-banking finance companies. The Trustee or theManagement Company shall not in any manner be liable in their personal capacitiesfor repayment of such financings.(c) For the purposes of securing any such financing, the Trustee may on the instructionof the Management Company mortgage, charge or pledge in any manner all or anypart of the Trust Property provided that the aggregate amount secured by such


12

mortgage, charge or pledge shall not exceed the limits provided under the Regulationsand/or any law for the time being in force.(d)Neither the Trustee nor the Management Company shall incur any liability by reasonof any loss to the Trust or any loss that a Unit Holder(s) may suffer by reason of anydepletion in the Net Asset Value that may result from any financing arrangement madehereunder in good faith.

(e) All financing shall be carried out based on Shariah compliant contracts with theprior approval from the Shariah advisor.

Any liability or loss incurred due to negligence of AMC/Wakeel or the Trustee shall beborne by them.

3.4.2 Restriction of Transactions with Connected Persons(a) The Management Company in relation to the Scheme shall not invest in anysecurity of a company if any director or officer of the Management Company ownsmore than five per cent of the total amount of securities issued, or, the directors andofficers of the Management Company own more than ten per cent of those securitiescollectively subject to exemption provided in the Regulations.

(b) The Management Company on behalf of the Scheme shall not without theapproval of its Board of Directors in writing and consent of the Trustee, purchase orsell any security from or to any Connected Person or employee of the ManagementCompany.

(c)Provided that above shall not be applicable on sale or redemptions of Units.

(d)For the purpose of sub-paragraphs (a) and (b) above the term director, officerand employee shall include spouse, lineal ascendants and descendants, brothers andsisters.

(e) All transactions carried out by or on behalf of the Scheme with connectedperson(s) shall be made as provided in the Constitutive Documents, and shall bedisclosed in the Scheme’s annual reports.

3.5 Risk DisclosureInvestors must realize that all investments in I s lamic mutual Funds and securities aresubject to market risks. Our target return cannot be guaranteed and it should be clearlyunderstood that the portfolio of the Fund is subject to market price fluctuations and otherrisks inherent in all such investments. The risks emanate from various factors that include,but are not limited to:

(a) Government Regulation Risk – Government policies or regulations are moreprevalent in some securities and financial instruments than in others. Funds thatinvest in such securities may be affected due to change in these regulations orpolicies, which directly or indirectly affect the structure of the security and/or inextreme cases a governmental or court order could restrain payment of capital,principal or income.

(b) Credit Risk - Credit Risk comprises of Default Risk, Credit a n d Spread Risk. Eachcan have negative impact on the value of the income and money marketinstruments including Sukuks etc:

(c) Default Risk - The risk that the issuer of the security will not be able to pay theobligation, either on time or at all;

(d) Credit Spread Risk - Credit spread may be defined as the risk that there may bean increase in the difference between the return/markup rate of any issuer'ssecurity and the return/markup rate of a risk free security. The difference betweenthis return/mark up rates is called a "credit spread". Credit spreads are based onmacroeconomic events in the domestic or global financial markets. An increase in


13

credit spread will decrease the value of income and including money marketinstruments;

(e) Downgrade Risk - Downgrade risk is the risk that a credit rating agency, such asPACRA or JCR-VIS or any other reputed international credit rating agency willreduce the credit rating of an issuer’s securities. Downgrades in credit rating willdecrease the value of those fixed income securities including money marketinstruments.

(f) Market Risk or Price Risk - The risk that the value of the fund due to its holding insecurities rise and fall as a result of change in macro-economic factors, marketsentiment, global economic stability and interest rate/markup fluctuations.

(g) Performance Risk - Performance risk is the uncertainty relating to theperformance of the Fund with respect to its ability to outperform the chosenbenchmark.

(h) Liquidity Risk – Liquidity risk is the possibility of deterioration in the price of asecurity

(i) Concentration Risk - Any significant transaction made by any investor couldsignificantly impact a Fund’s cash flow. If the third party buys large amounts of Unitsof the Fund, the Fund could temporarily have a high cash balance. Conversely,if the third party redeems large amounts of Units of the Fund, the Fund may berequired to fund the redemption by selling securities at an inopportune time. Thisunexpected sale may have a negative impact on the performance of theinvestment.

(j) Redemption Risk- There may be special circumstances in which the redemptionof Units may be suspended or the redemption payment may not occur within sixworking days of receiving a request for redemption from the investor.

(k) Events Risk - There may be adjustments to the performance of the Fund due toevents including but not limited to, natural calamities, market disruptions, mergers,nationalization, insolvency and changes in tax law.

(l) Distribution Risk – Dividends distribution may also be liable to tax because thedistributions are made out of the profits earned by fund and not out of the profitsearned by each unit holder. Unit holders who invest in a fund before distribution ofdividends may be liable to pay tax even though they may not have earned anygain on their investment as return of capital to investors upon distribution is alsotaxable.

(m) Shari’ah non-compliance Risk:The risk associated with employing funds in investments that are not consistent withthe principles of Shari’ah.

3.5.1 There may be times when a portion of the investment portfolio of the Schemeis not compliant either with the investment policy or the minimum investmentcriteria of the assigned ‘category’. This non-compliance may be due to variousreasons including, adverse market conditions, liquidity constraints or investment –specific issues. Investors are advised to study the latest Fund Manager Reportspecially portfolio composition and Financial Statements of the Scheme todetermine what percentage of the assets of the Scheme, if any, is not incompliance with the minimum investment criteria of the assigned category. Thelatest monthly Fund Manager Report as per the format prescribed by Mutual FundsAssociation of Pakistan (MUFAP) and financial statements of the Scheme areavailable on the website of the Management Company (www.habibfunds.com)and can be obtained by calling / writing to the Management Company.


14

3.6 DisclaimerThe Units of the Trust are not bank deposits and are neither issued by, insured by,obligations of, nor otherwise supported by SECP, any Government agency, theTrustee (except to the extent specifically stated in this document and the Deed) orany of the shareholders of the Management Company or any other bank orfinancial institution. The portfolio of the Fund is subject to market risks and risksinherent in all such investments.

Fund target return/ dividend range cannot be guaranteed. Fund’s unit price isneither guaranteed nor administered/ managed. It is based on the NAV that maygo up or down depending upon the factors and forces affecting the capitalmarkets and profit rates.

Disclosure:

There may be times when a portion of the investment portfolio of the Scheme is notcompliant either with the investment policy or the minimum investment criteria ofthe assigned ‘category’. This non-compliance may be due to various reasonsincluding, adverse market conditions, liquidity constraints or investment – specificissues. Investors are advised to study the latest Fund Manager Report speciallyportfolio composition and Financial Statements of the Scheme to determine whatpercentage of the assets of the Scheme, if any, is not in compliance with theminimum investment criteria of the assigned category. The latest monthly FundManager Report as per the format prescribed by Mutual Funds Association ofPakistan (MUFAP) and financial statements of the Scheme are available on thewebsite of the Management Company and can be obtained by calling / writing tothe Management Company.

Cleansing/Purification Process

▪Non-Shari’ah compliant InvestmentThis refers to the Shariah non-compliant investment made by the Fund Managerand any other shari’ah compliant investment which subsequently became Non-Shari’ah compliant. The said investment will be disposed of / withdrawn withimmediate effect. In the event, the disposal/withdrawal of the investment resultedin gain (through capital gain and/or dividend), the gain is to be channeled to anyother charitable bodies as advised by the Shariah adviser.

Reclassification of Shariah Status of Investments For The Shariah-Compliant Funds

A security may be reclassified as Shari’ah non-compliant in the periodic review ofthe securities by the commission or any other relevant Islamic Shari’ah competentauthorities. If the value of such Shariah non-compliant investment exceeds theoriginal investment cost, such securities should be disposed as soon as practicable,which in any event such disposal should be done within one (1) month after theannouncement day or receipt of such notice.

If the Shariah non-compliant investment is below the original investment cost, suchsecurities is allowed to be kept until the total amount of dividends received and/orthe market value/price equal the original investment costs. When the value ofShariah non-compliant investment equals the original investment cost, suchsecurities should be disposed as soon as practicable, which in any event suchdisposal should be within one (1) month.

4. OPERATORS AND PRINCIPALS4.1 Management Company


15

4.1.1. OrganizationHabib Asset Management Limited ( "HAML") is an Investment Advisory and AssetManagement Company licensed under the Non Banking Finance Companies(Establishment and Regulation) Rules , 2003. HAML was formed in 2007 and has asuccessful track record of almost eight years of managing mutual funds.

HAML has been able to successfully launch and manage 4 mutual funds including anIslamic Balanced Fund. The Mutual Funds currently under management include.First Habib Income Fund, First Habib Stock Fund, First Habib Cash Fund and First HabibIslamic Balanced Fund. All these funds are adequately performing funds in theirrespective categories.

HAML has been assigned Management Quality Rating of AM3 by The Pakistan CreditRating Agency which denotes ‘High management industry standards and benchmarks’.

4.2 Principal ShareholdersThe current shareholding structure of Habib Asset Management Limited is as follows:

Shareholding of HAML

Shareholding Paid up Capital% (Rs mln)

Bank Al-Habib Limited 30 69.00Habib Family & Friends 70 161.00

Total 100 230.00

HAML enjoys a strong backing from its group companies i.e. Bank AL Habib Limited,the premier bank of Pakistan.

4.3. Board of Directors and Management of the Management Company

S.No. Name of Director Directorship in otherCompanies

1. Mr. Ali Raza d. Habib, Chairman Habib Sugar Mills LimitedHabib Insurance Co. LimitedBank AL Habib LimitedHabib & Sons (Pvt.) Limited

2. Mr. Imran Azi m, CEO Treet Corporation LimitedFecto Sugar Mills Limited

3. Mr. Muhammad Ali Jameel TPL Tracker LimitedTPL Direct Insurance Ltd.Trakker Middle East LLCTRG Pakistan LimitedTrakker Energy (Pvt.) Ltd.TPL Properties (Pvt.) Ltd.

Trakke4. Mr. Mansoor Ali None5. Mr. Liaquat Habib Merchant None6. Vice Admiral ® Khalid M. Mir None7. Mr. Sajjad Hussain Habib Habibsons Investment Corp.

Mr. Ali Raza D. Habib - Chairman


16

Born in Bombay in 1942, Mr. Ali Raza D. Habib, is presently serving as the ManagingDirector & Chief Executive Officer of Habib Insurance Company Limited. He is theChairman of Bank AL Habib Limited and Habib Asset Management Limited. He is also onthe Board of Habib Sugar Mills Limited.

His early training program within the family group required of him to spend a short butadequate amount of time with Habib Bank Limited. He then went on to establish hiscareer with Habib Insurance Company Limited as a young officer rising to become theDeputy General Manager of the Company. During this period of 13 years, he alsoserved on the Fire & Marine Committee and in 1968 was appointed to the CentralCommittee, the governing body of the Insurance Association of Pakistan.

In 1969, Mr. Habib took up an assignment with Ali Asghar Textile Mills Limited, one of thethree textile spinning units set up by the group in the Korangi Industrial Area of Karachi.These mills were later devastated by the unprecedented disaster of floods in 1977.Mr. Habib then established in 1979 of the Fabric Division of Habib Sugar Mills Limited,which even today has a high reputation on the exports of quality household textiles.In 1980, he set up Season & Styles Limited, a garment manufacturing unit, which at firstbranded firmly in the domestic market and a short while later advanced to securesizeable export orders in the lucrative European markets.

In 1984, Mr. Habib was requested by the group to proceed to London and take chargeof Habib & Sons Limited, the parent group trading company which had recentlyacquired a UK license for commercial activities. Around that time Habibsons BankLimited, a UK registered bank was granted a license from Bank of England and Mr.Habib was given a position on the prestigious Board of Directors.

He returned to Pakistan in 1993 and soon after at the request of the Board of HabibInsurance Company Limited took charge as Managing Director and Chief ExecutiveOfficer, a position he continues to retain.

Mr. Imran Azim - Chief ExecutiveMr. Imran Azim is MBA in finance and has more than twenty five years of experience inMutual Fund Industry. He served NIT from 1977 to 1998 where he worked in almost all thedepartments including Investment, Marketing, Business Development and Accounts.After leaving NIT he joined Khalid Majid Hussain Rehman, a Chartered Accountants firmand later on joined Universal Insurance Company Limited. Prior to joining Habib AssetManagement Limited he was Chief Executive of Haroon Oils Limited.

Mr. Mohammad Ali Jameel - DirectorMr. Mohammad Ali Jameel is the Group CEO of TPL Holdings (Pvt.). He is also the CEO ofTPL Trakker Ltd. He is the Founding Director of TRG Pakistan Limited. Mr. Jameel’s otherbusiness interests include TPL Direct Insurance, Pakistan’s first direct insurance company,TPL Properties, a commercial real estate company and Trakker Energy Limited which is ajoint venture with Heritage Oil & Gas Limited of Canada, involved in gas exploration inPakistan. Formerly, Mr. Jameel was Chief Executive Officer of one of the largestbrokerage firms in Pakistan. He has also held several advisory posts in the Pakistan'sinformation technology and telecommunication sectors, including appointments on theTask Force on Telecom Deregulation. He is currently serving as a member of EconomicAdvisory Council (EAC), Ministry of Finance and Economic affairs and ReformCoordination Group constituted by the Minister for Finance & Economic Affairs. Mr.Jameel received his B.Sc. degree in Economics from the London School of Economics.He is also an Associate Member of the Institute of Chartered Accountants in England &Wales and qualified at KPMG Peat Marwick, London.

Mr. Mansoor Ali - DirectorMr. Mansoor Ali is presently working with Bank AL Habib Limited as General Manager. Heis an MBA and has more than 20 years banking experience.Vice Admiral (R) KHALID M.MIR - DirectorHe was commissioned from the British Royal Academy Dartmouth, UK in 1961 and wasawarded the Queens Sword of Honor. In his distinguished naval career of 39 years, he


17

served as Commander Pakistan Fleet, Commander Karachi and Deputy Chief of NavalStaff. He also served as Managing Director Karachi Shipyard (KSEW), Chairman andChief Executive of Karachi Port Trust (KPT) and Chairman Karachi Dock Labor Board(KLDB). His last appointment was ambassador of Pakistan to Lebanon and Cyprus. He iscurrently the President of IDA RIEU which is a Welfare Association for providing educationto Blind and Deaf children and is also Vice Chairman of Karachi Council of ForeignRelations (KCFR). He has been awarded Tamgha-e-Imtiaz, Sitara-e-Basalat and Hilal-e-Imtiaz in service for the country.

Mr. Liaquat Habib Merchant - DirectorMr. Liaquat H Merchant is a lawyer by profession who qualified in Bombay (India) andhas been practicing law since 1964. He is a barrister from Gray’s Inn and has thedistinction of being one of Pakistan’s reputed civil lawyers. Liaquat Merchant is thegrandson of Jinnah’s sister Mariambai who lived in Bombay. Mr. Merchant wasappointed as Administrator of the Estate of Quaid-i-Azam Mohammad Ali Jinnah by theHigh Court of Sindh at Karachi in 1980 and was also appointed as a Trustee of theQuaid-i-Azam Aligarh Education Trust by the same High Court in 1984. Liaquat Merchantis the Founder and Managing Trustee of the Jinnah Foundation (a registered charitabletrust which renders services to the poor, needy and deserving sections of society in thefield of human development (education and health)) as well as the Founder Presidentof the Jinnah Society which was established by him to propagate the principles, idealsand vision of Quaid-i-Azam Mohammad Ali Jinnah as a nation building exercise. LiaquatMerchant is a former Deputy Attorney General for Pakistan and has established a largenumber of trusts and other non-governmental organizations in Pakistan on which heserves as a member. Education and health are his passion and social service takes up alarge part of his time. Liaquat Merchant has responsible for various publications onJinnah including Jinnah a Judicial Verdict, The Jinnah Anthology, M. A. Jinnah CD ROMProject, Quotes from the Quaid and Quaid-i-Azam Nay Farmaya (Urdu translation ofQuotes from the Quaid). In recognition of the services rendered by Liaquat Merchant inthe field of education and health and propagation of the ideals, principles and vision ofQuaid-i-Azam Mohammad Ali Jinnah by his various publications and for establishing andmanaging various Jinnah related institutions involving public services, the President ofPakistan conferred Sitara-i-Imtiaz on him in the year 2008. Liaquat Merchant is thefounder and Managing Partner of Liaquat Merchant Associates (LMA) a reputed lawfirm specializing in Banking, Finance, Insurance, Company Law, Corporate Consultancy,Merger and Acquisitions and Capital Markets. The firm has extensive local and foreignaffiliations with other law practices.

Mr. Sajjad Hussain HabibMr. Sajjad Hussain Habib is BS Economics from Bentley College, USA. He is presentlyManaging Director of Habib Investment Corporation (UAE). He has 20 years bankingexperience in various positions.

4.3.1. Profile of the Management

Mr. Imran Azim - Chief Executive OfficerMr. Imran Azim is MBA in finance and has more than twenty five years of experience inMutual Fund Industry. He served NIT from 1977 to 1998 where he worked in almost all thedepartments including Investment, Marketing, Business Development and Accounts. Hisbiggest achievement at NIT was launching of two new products i.e. Nai Life and RoshanKal for small investors. After leaving NIT he joined Khalid Majid Hussain Rehman, aChartered Accountants firm and later on he joined Universal Insurance CompanyLimited. Prior to joining Habib Asset Management Limited he was Chief Executive ofHaroon Oils Limited.

Maleeha Mimi Bangash – Deputy CEOMaleeha Mimi Bangash is Group Head, Habib Asset Management Ltd, the senior mostexecutive (after the CEO), and she is overseeing the areas of Investments, Research andOperation, and Sales and Marketing. She has around 16 years of rich and variednational and international experience in leadership positions, including in Singapore,and Turkey, primarily in the areas of Asset Management/ Investment Management andFinancial Services. She obtained her MBA (Investments and Finance) from University of


18

Chicago, Booth School of Business and graduated with Honors. She also has an MBAdegree from LUMS. Ms. Bangash has worked with MCB AMC, UBL Fund Managers and JSInvestments (all Asset Management Companies) in senior management positions. Shealso served as Member /Commissioner, Competition Commission of Pakistan, (CCP)when it was established.

Mr. Abbas Qurban – Chief Financial Officer & Company SecretaryMr. Abbas Qurban is Fellow member of Institute of Cost & Management Accountants(ICMAP) and Institute of Public Finance Accountant (PIPFA). He is also Diplomaed fromInstitute of Bankers (IBP) and MBA (Finance). He has overall working experience of over20 years in various financial services (modaraba, leasing, investment banking andTakaful) and manufacturing sectors like textile and packaging industry.

Mr. Junaid Kasbati - CIOMr. Junaid Kasbati is an MBA in Banking & Finance and possesses over 13 years of richand valuable experience in Money/ Capital market. He is also an associate member ofFinancial Market Association of Pakistan (FMAP). Before joining Habib AssetManagement he was Head of Treasury in Crescent Leasing Corporation Limited wherehe was supervising the money market and equity operations. He is working with HabibAsset Management Ltd. since 2006.

Ms. Ishrat Malik - Head of MarketingMs. Malik is an MBA and has more than Six years working experience with Habib AssetManagement Limited (HAML). Prior to joining HAML she had worked with an NGO forabout eight years and participated in a number of literacy projects. She is life timemember of Rotary International.

Profile of the Shari’ah Advisor :

4.4. Performance of Listed Associated Companies and Funds under Management

4.4.1. Bank Al-Habib Limited

Figures in million CY15 CY14 CY13 CY12 CY011 CY10 CY09 CY08Paid-up Capital 11,114 11,114 10,104 10,104 8,786 8,786 6,101 4,785Equity 37,856 32,628 25,282 23,814 19,854 16,066 14,104 11,633Total Assets 639,712 578,919 460,727 453,106 384,282 301,552 249,806 177,324Deposits 516,213 446,409

99386,161 340,393 302,099 249,774 189,280 144,390

Net Profit 7,405 6,349 5,155 5,455 4,533 3,602 2,856 2,425

Earnings perShare

6.66 5.71 4.64 5.40 5.16 4.10 4.68 3.97

4.4.2. FUNDS UNDER THE MANAGEMENT OF THE HABIB ASSET MANAGEMENTLIMITED

First HabibIncome

Fund

First HabibStock Fund

First HabibCash Fund

First HabibIslamic

BalancedFundCashFund

LaunchDate

June 02,2007

October10, 2009

March 10,2011

Nov. 09,2012

TrusteeCDC

PakistanLimited

CDCPakistanLimited

CDCPakistanLimited

CDCPakistanLimited

Net AssetValue30-06-16

1,330.38million

132.67million

1,,034.53million

113.03million

Par valueper unit

100 100 100 100


19

Listing PakistanStock

Exchange

PakistanStock

Exchange

PakistanStock

Exchange

PakistanStock

ExchangeBenchmark 50% Avg. of

6 monthKibor and

50% 6month bankdeposit rateof 3 A- and

aboverated banks

KSE-30Index(Total

Return)

50% Avg. of3 months

bankdeposit ratesof 3 AA andabove ratedbanks and

50% 3months PKRV

KMI 30 indexand the

mostrecently

published 3-Month

deposit ratesoffered by

three IslamicBanks/

windowsrated A- and

abovebased on

theweightedaverage

allocation ofequity and

otherinstruments

Rating AA -(f) byPACRA

1 Star byJCR VIS

AA(f) by JCRVIS

2 Star byPacra

4.5 Role and Responsibilities of the Management CompanyThe Management Company shall manage, operate and administer the Scheme inaccordance with the Rules, Regulations directives, circulars and guidelines issued bySECP, the Deed and this Offering Document.

The Fund is based on the Shariah principles of “Wakala”, in which the ManagementCompany shall manage, operate and administer the Scheme and Fund Property in theinterest of the Principal (Unit Holders) in good faith, and to the best of its ability

4.5.1 Administration of the Scheme

The Management Company shall administer the Scheme in accordance with theRules, the Regulations, the Deed and this Offering Document and the conditions (ifany), which may be imposed by the Commission from time to time.

4.5.2 Management of Fund PropertyThe Management Company shall manage the Fund Property in the interest of the UnitHolders in good faith, to the best of its ability and without gaining any undueadvantage for itself or any of its Connected Persons and group companies or its officers,and subject to the restrictions and limitations as provided in the Deed and the Rules andRegulations. Any purchase or sale of investments made under any of the provisions ofthe Deed shall be m a d e by the Trustee according to the instructions of theManagement Company in this respect, unless such instructions are in conflict with theprovisions of the Deed or the Rules and Regulations. The Management Company shallnot be liable for any loss caused to the Trust or to the value of the Fund Property due toelements or circumstances beyond its reasonable control.

The Management Company shall comply with the provisions of the Regulations, theDeed and this Offering Document of the Scheme for any act or matter to be done by itin the performance of its duties and such acts or matters may also be performed onbehalf of the Management Company by any officer(s) or responsible official(s) of theManagement Company or by any nominee or agent appointed by the ManagementCompany and any act or matter so performed shall be deemed for all the purposesof the Deed to be the act of the Management Company. The ManagementCompany shall be responsible for the acts and omissions of all persons to whom it maydelegate any of its functions, as if these were its own acts and omissions and shallaccount to the Trustee for any loss in value of the Trust Property where such loss hasbeen caused by willful act and / or omission or of its officers, officials or agents.

4.5.3 A p p o i n t m e n t of DistributorsThe Management Company, shall from time to time under intimation to the Trusteeappoint, remove or replace one or more suitable persons, entities or parties asDistributor(s) for carrying on Distribution Function(s) at one or more location(s) locally or


20

internationally. The Management Company may also i t se l f act as a Di s t r ibutor f o rcar ry ing on Di s t r ibut ion Functions and updated list of distributors would beavailable on official website of the Management Company.

The Management Company shall ensure, where it delegates the Distribution Function,that:

(a) The Distributors to whom it delegates, have acquired registration within sixmonths from SECP in line with SRO. 1160(I) 2015 dated November 25, 2015as registered service providers; and the written contract with theDistributors clearly states the terms and conditions for avoidance of fraudsand sales based upon misleading information.

The Management Company and Distributor shall not:I. involve either directly or indirectly in the mis-selling of Collective

Investment Scheme;II. sell units of Collective Investment Scheme directly or indirectly by

making a false and mis-leading statement, concealing or omittingmaterial facts of the Scheme and concealing the risk factorsassociated with the Scheme;

(b) The Management Company or distributor shall take reasonable care to ensuresuitability of the scheme to the investor.

(c) The Management Company or distributor shall ensure that;

i. any performance reporting/ presentation is accompanied by allexplanations, qualifications, limitations and other statements that arenecessary to prevent such information from misleading investors.

ii. promotional materials do not contain untrue statements or omit to statefacts that are necessary in order to prevent the statements from beingmisleading, false or deceptive.

iii. performance is measured and presented after taking into account therisk-tolerance, investment objectives, level of understanding andknowledge of the recipient.

4.5.4 A p p o i n t m e n t of Investment Facilitator

The Management Company may, at its own responsibility & cost, from time to timeappoint Investment Facilitators to assist it in promoting sales of Units. An update listof investment facilitators appointed by the Management Company shall be madeavailable at all times on the websites of the Management Company.

The Management Company shall ensure, where it appoints the investment facilitator,that:

a. the investment facilitator have acquired registration with the Mutual FundsAssociation of Pakistan (MUFAP) as registered service providers and are abidingby the code of conduct prescribed by the Association; and

b. the written contract with the Investment facilitator clearly states the terms andconditions for avoidance of frauds and sales based upon misleading information

4.5.5 M a i n t e n a n c e of Accounts and RecordsThe Management Company shall maintain at its principal office, complete and properaccounts and records to enable a complete and accurate view to be formed ofthe assets and liabilities and the income and expenditure of the Scheme, alltransactions for the account of the Scheme, amounts received by the Scheme inrespect of issue of Units, payments made from the Scheme on redemption of the Unitsand by way of distributions and payments made at the termination of the Scheme. TheManagement Company shall maintain the books of accounts and other records of the


21

Scheme for a period of not less than ten years.The Management Company shall ensure that no entry and exit from the Scheme(including redemption and re-issuance of Units to the same Unit Holders on differentNAVs) shall be allowed other than the following manners, unless permitted otherwise bythe Commission under the Regulations:

(a) cash settled transaction based on the formal issuance and redemption requests.

(b) net off issuance and redemption transaction at same net asset value whenredemption request is ready to disburse and rank at the top in the list of pendingredemption requests (if any).

The Management Company shall clearly specify Cut-Off Timings (for acceptance ofapplication forms of issuance, redemption, and conversion of Units of the Scheme) inthis Offering Document, on its web site and at designated points. Such Cut-Off Timingshall uniformly apply on all Unit Holders.

The Management Company shall ensure all valid redemption request are paid basedon ranking of the request in a queue.

4.6 Maintenance of Unit Holders Register

4.6.1. A Register of Unit Holders w i l l b e m a i n t a i n e d b y JW AF F S R e g i s t r a rS e r v i c e s (P v t . ) L i m i t e d or such other company, as the Management Companymay appoint after giving prior notice to the Unit Holders.

4.6.2. The office of the Transfer Agent is located at 407-408, 4th Floor, Al-AmeeraCentre, Shahrah-e-Iraq, Saddar, Karachi, where Register of Unit Holder will bemaintained.4.6.3. Every Unit Holder will have a separate Registration Number. The ManagementCompany shall use such Registration Number for recording Units held by the Unit Holder.Unit Holder’s account identified by the registration number will reflect all the transactionsin that account held by such Unit Holder.

4.6.4. DisclaimerThe Management Company shall not be under any liability except such liability asmay be expressly assumed by it under the Rules, the Regulations and the ConstitutiveDocuments, nor shall the Management Company (save as herein otherwiseprovided) be liable for any act or omission of the Trustee nor for anything except for itsown gross negligence or willful breach of duty and the acts and omissions of all personsto whom it may delegate any of its functions as manager as if they were its own actsand omissions. If for any reason it becomes impossible or impracticable to carry out theprovisions of the Constitutive Documents, the Management Company shall not be underany liability therefore or thereby and it shall not incur any liability by reason of any errorof law or any matter or thing done or suffered or omitted to be done in good faithhereunder. The Management Company shall not be liable for any loss caused to the Fundor to the value of the Trust Property due to any elements or circumstances of ForceMajeure.

4.7 Role of the Trustee

The trustee shall perform its role as specified in the Rules, Regulation anddirectives issued there under, this Deed and the Offering Document.

The Trustee shall exercise all due diligence and vigilance in carrying out its duties andin protecting the interests of the Unit Holder(s). The Trustee shall not be under any liabilityon account of anything done or suffered by the Trust, if the Trustee had acted ingood faith in performance of its duties under this Trust Deed or in accordance with orpursuant to any request of the Management Company provided it is not in conflict withthe provisions of this Trust Deed or the Rules and Regulations. Whenever pursuant to any


22

provision of this Trust Deed, any instruction, certificate, notice, direction or othercommunication is required to be given by the Management Company, the Trustee mayaccept as sufficient evidence thereof:

O a document signed or purporting to be signed on behalf of the ManagementCompany by any authorized representative(s) whose signature the Trustee is for the timebeing authorized in writing by the Management Committee to accept; and

o any Instructions received online through the software solution adopted by theManagement Company/Trustee in consultation with each other shall be deemed to beinstructions from the authorized representative(s)

The Trustee shall not be liable for any loss caused to the Fund or to the value of theTrust Property due to any elements or circumstances of Force Majeure

In the event of any loss caused due to any gross negligence or willful act and/oromission, the Trustee shall have an obligation to replace the lost investment forthwithwith similar investment of the same class and issue together with all rights and privilegespertaining thereto or compensate the Trust to the extent of such loss. However thetrustee shall not be under any liability thereof or thereby and it shall not incur anyliability by reason of any error of law or any matter or thing done or suffered or omittedto be done in good faith hereunder.

4.7.1 O b l i g a t i o n s under Regulations and Constitutive DocumentThe Trustee shall perform all the obligations entrusted to it under the Regulations,circulars, directives, the Deed and this Offering Document and discharge all its duties inaccordance with the Rules, Regulations, the Trust Deed and this Offering Document.Such duties may also be performed on behalf of the Trustee by any officer orresponsible official of the Trustee or by any nominee or agent appointed by the Trusteeunder intimation to the Management Company. Provided that the Trustee shall beresponsible for the willful acts and omissions of all persons to whom it may delegateany of its duties, as if these were its own acts and omissions and shall account to theTrust for any loss in value of the Fund Property where such loss has been caused bynegligence or any reckless willful act or omission of the Trustee or any of its attorney(ies), or agents.

4.7.2 Custody of AssetsThe Trustee has the responsibility for being the nominal owner and for the safe custodyof the assets of the Fund on behalf of the beneficial owners (the Unit Holders), withinthe framework of the Regulations, the Trust Deed and Offering Document issued for theFund.

4.7.3 I n v e s t m e n t of Trust Property at direction of Management CompanyThe Trustee shall invest the Trust Property from time to time at the direction of theManagement Company strictly in terms of the provisions contained and the conditionsstipulated in the Deed, this Offering Document(s), the Regulations, circulars, directivesand the conditions (if any) which may be imposed by the Commission from time to time.

4.7.4 C a r r y i n g out instructions of the Management CompanyThe Trustee shall carry out the instructions of the Management Company in all mattersincluding investment and disposition of the Fund Property unless such instructionsare in conflict with the provisions of the Deed, this Offering Document(s), theRegulations, the Circulars and Directives of SECP or any other applicable law.

4.7.5 L i a b i l i t i e s of the TrusteeThe Trustee shall not be under any liability except such liability as may be expresslyassumed by it under the Rules, the Regulations and/or the Deed, nor shall the Trustee(save as herein otherwise provided) be liable for any act or omission of theManagement Company or for anything except for loss caused due to its willful acts oromissions or that of its agents in relation to any custody of assets of investmentsforming part of the Fund Property. If for any reason it becomes impossible orimpracticable to carry out the provisions of the Deed the Trustee shall not be under any


23

liability therefore or thereby and it shall not incur any liability by reason of any errorof law or any matter or thing done or suffered or omitted, to be done in good faithhereunder. The Trustee shall not be liable for any loss caused to the Trust or to the valueof the Fund Property due to any elements or circumstances beyond its reasonablecontrol.

4.7.6 D i s c l a i m e rThe Trustee shall not be under any liability except such liability as may be expresslyassumed by it under the Rules and Regulations and the Deed nor shall the Trustee beliable for any act or omission of the Management Company nor for anything except forloss caused due to its willful acts or omissions or that of its agents in relation to anycustody of assets of investments forming part of the Trust Property. If for any reason itbecomes impossible or impracticable to carry out the provisions of the Deed the Trusteeshall not be under any liability therefore or thereby and it shall not incur any liability byreason of any error of law or any matter or thing done or suffered or omitted to be donein good faith hereunder.

4.8 Shariah AdvisorManagement Company, on its own expense, has appointed Mufti Ismaullah as theShariah Advisor for the Fund. Mufti Ismatullah is qualified from Jamia Dar-ul-Uloom, Karachi,which is running by Mufti Muhammad Taqi Usmani and Mufti Muhammad Rafi Usmani. Heis also Shariah Advisor of Bank Al Habib Limited, First Habib Islamic Balanced Fund, PakQatar Family Takaful and Pak Qatar General Takaful..The Shariah Advisor has been appointed under intimation to the Trustee for a periodof three years, but may be reappointed on completion of the term. The ManagementCompany may at any time, with prior notice to the Trustee and intimation to theCommission, terminate the Agreement with the Shariah Advisor by giving a notice as perthe Agreement with the Shariah Advisor, before the completion of the term, and fillthe vacancy with the approval of the Commission and the Trustee. Furthermore, theagreement entered into for the appointment of the Shariah Advisor shall be furnishedto the Commission.

4.8.1 Duties and Responsibilities of Shariah AdvisorThe Shariah Advisor shall advise the Management Company on matters relating toShariah compliance and recommend general investment guidelines consistent withShariah. Any verdict issued by the Shariah Advisor in respect of any Shariah relatedmatter would be final and acceptable to the Trustee, the Management Company,the Unit Holders and other parties. In case of any dispute between the Shari’ah Advisorand the management, the matter may be referred to Shari’ah Advisory Board (“SAB”) ofSECP for resolution.

The Shariah Adviser shall do the research as appropriate on the criteria followed byIslamic Unit Trusts all over the world for the purpose of screening of investments. TheShariah Advisor will then decide as to which screening criteria are relevant to beused in the context of Pakistan’s capital markets and the instruments availabletherein, and which need to be modified/added/deleted.

The Shariah Advisor shall provide technical guidance and support on various aspects ofShariah, so as to enable the Management Company to ensure the Fund is ShariahCompliant.

The Shariah Advisor has certified that Investment Policy of the Trust is compliantwith the requirements of Shariah. However, in case there is a requirement for anyamendment, based on future research for purposes of increasing the Shariahacceptability of the Investment Policy, permission for necessary amendments of theDeed may be sought from the Commission.The Shariah Advisor shall determine an appropriate percentage of income and cashflows included in the income and cash flow of the companies in which the Unit Trust hasinvested from activities not in accordance with the principles of the Shariah, and willrecommend to the Management Company the criteria for selecting the Charities towhom such sums shall be donated, subject to the condition that such approved charity


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organization is not related to the Shariah Adviser, Management Company or any of theiremployees.

At the end of each Annual and Semi Annual Accounting Period or such other interval asthe Commission may require, the Shariah Advisor shall issue a Shari’ah compliancecertificate to the effect that all the business activities, investments and operations of thepreceding year’s of the Fund are in conformity with principles of Shari’ah. This report shallbe included in the Annual reports or such other required reports of the fund inaccordance with the Shariah guidelines issued by the Shariah advisor.

Consult the Commission who may consult the Shariah Advisory Board where there is anyambiguity or uncertainty as to an investment, instrument, system, procedure and/orprocess.

Ensure that the Shariah-compliant funds comply, with any guideline, ruling or decisionissued by the Commission

4.9 Transfer AgentThe Management Company has appointed JWAFFS Registrar Services (Pvt.) Limited,having its office at 407-408, 4th Floor, Al-Ameera Centre, Shahrah-e-Iraq, Saddar,Karachi as the Transfer Agent of the Fund until any further notice and intimation tothe Trustee. The Management Company will be responsible for maintaining the UnitHolder’s Register, preparing and issuing account statements, Unit Certificates anddividend warrants/advice and providing related services to the Unit Holders.

4.10 CustodianCentral Depository Company of Pakistan Limited, the Trustee will also be performingthe functions of the custodian of the Fund Property. The salient features of thecustodial function are:

(a) Segregating all property of the Fund from Custodian’s Own property and that ofits other clients.

(b) Assuring the smooth inflow/outflow of dematerialized securities and such otherinstruments as required.

(c) Ensuring that the benefits due on investments are received and credited to theFund’s account.

The Trustee may, in consultation with the Management Company, from time to time,appoint, remove or replace one or more Custodian(s) for performing the CustodianFunction at one or more locations, on terms and conditions to be agreed between theCustodian and the Trustee and agreed by the Management Company for the safekeeping of any portion of the Fund Property.

4.11 Distributors/Facilitators

4.11.1 P a r t i e s detailed in Annexure C of this Offering Document have each beenappointed as Distributors to perform the Distribution Functions at their AuthorizedBranches. The addresses of these branches are given in Annexure C of this OfferingDocument; these branches may be increased or decreased by the ManagementCompany from time to time. The Management Company may, from time to time,appoint additional Distributors (if they fulfill the requirement of regulations) or terminatethe arrangement with any Distributor and intimate the Trustee and Commissionaccordingly. The Management Company may itself perform the functions of aDistributor either directly or through sub-distributors.4.11.2 T h e Distributors will be responsible for receiving applications for Purchase,Redemption, Conversion or Transfer of Units etc. They will be interfacing with andproviding services to Unit Holders, including receiving applications for change of addressor other particulars or applications for issuance of duplicate certificates, requests forincome tax exemption or Zakat exemption, etc. for immediate transmission to the


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Management Company or Transfer Agent as appropriate for further action. TheManagement Company shall remunerate the Distributors out of its resources and/orfrom Sales Load.

4.11.3 T h e Management Company may, at its sole discretion, from time to time,appoint Investment Facilitators (Facilitators). The Facilitators’ function is to identify, solicitand assist investors in investing in the Fund. The Management Company shallremunerate the Facilitators out of its resources and/or from Front-end Load.

4.12 Auditors

KPMG, Taseer Hadi Khalid & Co., Chartered Accountants

They will hold office until the transmission of the reports and accounts, which will coverthe period from commencement of the Trust up to the end of the Accounting Periodand will, afterwards, be eligible for reappointment by the Management Company withthe concurrence of the Trustee. However, an auditor may be reappointed for suchterms as stipulated by the Regulations and/or the Ordinance, as amended from time totime. The appointment of Auditor and contents of the Auditor’s report shall be inaccordance with the provisions of the Rules and Regulations.

4.12.1 The Auditors shall have access to the books, papers, accounts andvouchers of the Trust, whether kept at the office of the Management Company,Trustee, Custodian, Transfer Agent or elsewhere and shall be entitled to require from theManagement Company, Trustee and their Directors, Officers and Agents suchinformation and explanations as considered necessary for the performance of audit.

4.12.2 The Trustee shall be entitled to require the Auditors to provide such further reportsas may be agreed between the Trustee and the Management Company as may beconsidered necessary to facilitate the Trustee in issuing the certification required underthe Regulations.

4.12.3 The Auditors shall prepare a written report to the Unit Holders on the accountsand books of accounts of the Trust and the balance sheet, profit and loss account, cashflow statement and statement of movement in Unit Holders’ Funds and on every otherdocument forming part of the balance sheet and profit and loss account, includingnotes, statements or schedules appended thereto.

4.12.4 The contents of the Auditors report shall be as mentioned in the Regulations.

4.13 Legal AdvisorsThe legal advisors of the Fund are:

Mohsin Tayebaly & Co.Barristers & Advocates2nd Floor, DIME Centre, BC-4, Block-9,Civil Lines, Karachi, Pakistan

4.14 BankersBankers to the Scheme are Bank AL Habib Limited and any other bank to beappointed by the Management Company. The Trustee shall maintain and operate theBank Accounts of the Scheme at the said Bank(s).

4.14.1 Bank Accounts(a) The Trustee, at the request of the Management Company, shall open BankAccount(s) titled CDC Trustee First Habib Islamic Income Fund for the Unit Trust atdesignated Bank(s) inside or outside Pakistan, subject to the relevant laws, Trust Deed,Rules and Regulations, for collection, investment, redemption or any other use of theTrust’s Funds.


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While opening and operating any type of account and/or making investments inoffshore countries on the instructions of Management Company, if the Trustee isrequired to provide any indemnities to offshore parties then Trustee and the Fund wouldbe counter indemnified by the Management company to such extent.

(b) The Management Company may also require the Trustee to open Shari’ahcompliant Bank Account(s) as Distribution Account(s) for dividend distribution out of theUnit Trust. Notwithstanding anything in the Deed, the beneficial ownership of thebalances in the Accounts shall vest in the Unit Holders.

(c) All bank charges for opening and maintaining Bank Accounts for the Trust shall becharged to the Fund.

(d) All income, profit etc. earned in the Distribution Account(s), including thoseaccruing on unclaimed dividends, shall form part of the Trust Property for the benefitof the Unit Holders and shall be transferred periodically from the Distribution Account(s)to the main Bank Account of the Trust.

(e) The amounts received from the Investors before the Initial Period shall bedeposited in a Bank Account of the Fund and any income, profit etc earned and/oraccrued on the investments of that amount up to and including the day before theopening of Initial Period shall not form part of the Trust Property

and shall be paid by the Management Company or the Trustee to those Investorsparticipated before the Offering Period, either in cash or in additional Units as selectedby those Investors, in proportion of their investments.

(f) The Trustee shall, if requested by the Management Company at its discretion alsoopen a separate Account designated by the Management Company. Theseaccount(s) may be used for the purpose of collection of sale proceeds, wherecollections received on account of subscription of Units by investors of various unit trustsand the administrative plans that are managed by the Management Company shall beheld prior to their being allocated and transferred to pertinent unit trust(s). Suchaccount(s) may also be used for temporary parking for the purpose of redemption.Provided however, in relation to the other unit trusts managed by the Management

Company mentioned above, there are similar provisions in the trust deeds of suchFunds and have Trustee as common between them. such accounts shall be in the titleof CDC Trustee First Habib Islamic Income Fund.

Bank Accounts shall only be opened in Scheduled Islamic Banks, Islamic bankingwindows of scheduled commercial banks. In case an account needs to be openedwith a conventional bank, it shall only be a current account and it shall be openedafter specific approval from the Shari’ah Advisor.

4.15 Rating of the SchemeThe Management Company will be obliged to obtain a rating of the Scheme, oncethe Scheme becomes eligible for rating as per the criteria of the rating agency, andsuch rating shall be updated at least once every Financial Year and also published inthe annual and quarterly reports of the Scheme as well as on the ManagementCompany’s website.

4.16 Minimum Fund SizeThe minimum size of First Habib Islamic Income Fund shall be one hundred million rupeesat all times during the life of the scheme. In case of after the initial public offering orsubsequently at any time if the size of open end scheme falls below that minimum sizeof one hundred million rupees, the asset management company shall ensurecompliance with the minimum fund size within three (3) months of its breach and if thefund size remains below the minimum fund size limit for consecutive ninety (90) daysthe asset management company shall immediately intimate the grounds to the


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Commission upon which it believes that the scheme is still commercially viable andits objective can still be achieved.

5. CHARACTERISTICS OF UNITS5.1 UnitsAll Units and fractions thereof represent an undivided share in the Fund and rank paripassu as to their rights in the net assets, earnings, and the receipt of the dividendsand distributions. Each Unit Holder has a beneficial interest in the Fund proportionate tothe Units held by such Unit Holder. For the convenience of investors, theManagement Company may issue Units with different options for differentarrangements as chosen by the investor from time to time, after seeking priorapproval of the Commission and Shariah Advisor and amending the Offeringdocument.

5.2 Classes of Unitsa. Class “A” Units issued to the Investors participated before the Initial Period

(Pre-IPO) and during Initial Period (IPO).

b. Class “B” Units which shall be offered and issued after the Initial Periodof Offer.

Management Company may introduce additional classes of units, via supplementaloffering document(s).

Irrespective of the different classes of Units issued, all Units issued from time totime shall rank pari passu inter se and shall have such rights as are set out in the TrustDeed and this Offering Documents.

5.3 Types of Units

5.3.1 An investor shall, at the time of opening an account, select the type(s) of Unit(s) inwhich the investor wishes to invest, i.e. Growth Unit and/ or Income Unit.

5.3.2 The minimum amount of investment to open and maintain an account isRs.10,000/- for Growth Units and Rs.100,000/- for Income Units. The ManagementCompany reserves the right to alter the minimum amounts stated hereinabove. Anysuch change shall be applicable to future Unit Holders only.

After the initial investment, Unit Holders of First Habib Islamic Income Fund may adda minimum of Rs.1,000/- per transaction at their convenience. Units of FHIIF (includingfractions thereof) shall be issued against the amount received from the Unit Holder(s) inaccordance with the procedure laid down in this Offering Document. The ManagementCompany may alter the minimum amount required for opening, maintaining or addingto the account. Provided that in case of an upward change in the minimum amountrequired for maintaining the account or adding funds, the Management Companyshall give seven days’ notice to Unit Holders.

(i) Growth Units: The Unit value grows in line with the growth in the NAV, and the Unit Holders shall

receive cash dividend and/or bonus units at the time of distribution as declaredby the Board of Directors of the Management Company

( i i ) Income Units: The Unit value grows in line with the growth in the NAV, and the Unit Holders

shall receive distribution income in the form of cash, if any distributionannounced by the Fund

The Unit Holders, based on their own consent & instructions and with priorintimation to the Management Company, may exercise the option ofredeeming a certain number of Units for fulfilling their requirement of a certain


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cash amount at Regular Intervals (i.e. monthly, quarterly, semi-annually orannually). Such instructions shall be given in writing at the beginning or at thetime of purchase of Units.

Such periodic payment to the Income Units Holders shall be made byredeeming such number of Units as decided by the Management Company.

5.3.3 Such periodic payment shall be processed by the Management Company on the30th day of each calendar month. Provided that if 30th day of the month of a certainregular interval is not a Dealing Day the redemption arrangement of Income Units wouldbe transferred to the next Dealing Day.

5.3.4 Depending upon the instructions given by the Income-Unit Holders, the Income Unitsare further classified into two types:

(a) Flexible Income Units - The Flexible Income Unit Holders shall, at the time of purchase orbeginning of a Regular Interval, authorize the Management Company to decide thequantum of part redemption of their Unit holdings at the end of every Regular Intervalbased on the performance (NAV growth) of the Fund during that Regular Interval.

If the value of investment increases (due to growth in NAV) during an interval,the Management Company will calculate the number of Units to be redeemed in such amanner that the total redemption value of such Units is equal to the increase in the valueof investment during that interval.

If the value of investment falls (due to fall in NAV) during an interval, theManagement Company will not redeem any Units at the end of that interval. The amountso redeemed (net of any applicable taxes) shall be made through payment instruments ortransferred to the designated bank account within six (6) working days of theredemption.

(b) Fixed Income Units - The Fixed Income Unit Holders shall, at the time of purchase orbeginning of a Regular Interval, specify a fixed cash amount required by them atRegular Intervals and authorize the Management Company to redeem (at the prevailingNAV) such number of Units from their holding that in rupee terms is equivalent to thespecified fixed amount required at the end of every Regular Interval (net of applicabletaxes).

The amount so redeemed shall be made through payment instruments or transferredto the designated bank account within six (6) working days of the redemption. As a resultof operation of this Clause, the capital invested may deplete in case sufficient returns arenot earned to cover the amount required by the Unit Holder.

5.4 Purchase and Redemption of Units(a) Units are purchased at the Offer Price and redeemed at the Redemption Price atany of the Authorized Distribution Offices during Business Hours on any Dealing Day inaccordance with the procedure set out in of this Offering Document.

(b) Units of the Scheme shall be allocated on the basis of Purchase (Offer) Priceapplicable on the date of receipt of duly completed purchase application along with theonline payment/ payment instrument within cutoff timings.

(c) During the period the register is closed, the sale, redemption and conversion ofUnits will be suspended.

(d) The Management Company may decline an applicant for issue of units if it is ofthe opinion that it will not be possible to invest the substantial inflow of Funds orto meet a n y regulatory requirements.


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5.5 Procedure for Purchase of Units

5.5.1 W h o Can Apply?Any investor or any related group of investors qualified or authorized to purchase theUnits may make applications for the Purchase of Units in the Fund. Application may bemade pursuant to the procedures described in paragraph 6.4.4 below by any qualifiedor authorized investor(s) including, but not limited to, the following:

(a) Citizens of Pakistan resident in Pakistan. In respect of minors below 18 years ofage, applications may only be made by their guardians.

(b) Companies, corporate bodies, financial institutions, banks, partners of a firm andsocieties incorporated in Pakistan provided such investment is permitted under theirrespective memorandum and articles of association and / or bye-laws.

(c) Pakistanis resident abroad, foreign nationals and companies incorporated outsidePakistan can apply for Units subject to the regulations of the State Bank of Pakistan andthe Government of Pakistan and any such regulations and laws that may apply to theirplace of residence, domicile and citizenship. The payment of dividends and redemptionproceeds to such investors shall be subject to the relevant taxation and exchangeregulations / laws. Any person making an application for the Purchase of Units in theFund shall warrant that he/she is duly authorized to purchase such Units.

(d) Provident Funds constituted by companies registered under the CompaniesOrdinance, 1984, subject to conditions and investment limits as laid down in EmployeesProvident Fund (Investment in Listed Securities) Rules, 1996, as amended from time totime, including by SROs.

(e) Provident, Pension and Gratuity Funds constituted by organizations other thancompanies under Section 20 (h) of the Trusts Act 1882, (11 of 1882).

(f) Insurance companies under the Insurance Ordinance, 2000.

(g) Non Profit Organization under Rule 213 (i) of the Income Tax Rules, 2002.

(h) Fund of Funds.

How can Units be purchased?

5.5.2 Account Opening Procedure

The procedure given below is designed for paper-based transactions. The ManagementCompany at a later date after seeking approval of the Commission may introduceelectronic/Internet based options for the transactions.

(a) i n c a s e o f n e w i n v e s t o r b e f o r e before purchasing Units of theFund an investor must open an account with Management Company using theAccount Opening Form (HAML 01) attached to this Offering Document along with KYCform.

(b) In case of individuals, a photocopy of the Computerized National Identity Card(CNIC), NICOP or Passport etc. of the applicant or any other form of identificationacceptable to the Management Company needs to be furnished. The ManagementCompany may also requires other documents for processing account opening request inaccordance with the laws as may be applicable from time to time.

(c) In case of a body corporate or a registered society or a trust the followingdocuments would be required,

(i) Duly certified copy of the memorandum and articles of association/ Charter/Byelaws or rules and regulations;


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(ii) Duly certified copy of power of attorney and/or relevant resolution of the board ofdirectors delegating any of its officers to invest the Funds and/ or to realize theInvestment and;

(iii)Duly certified copy of the Computerized National Identity Card (CNIC) of the officerto whom the authority has been delegated.(d) In case of existing Unit Holders, if any of the documents (in a-c above) havepreviously been submitted with the Management Company and/or Transfer Agent,fresh submission of documents will not be required provided that submitted documentsare acceptable to Management Company. However, the account number must beprovided to facilitate linking.

Any change of name or address of any unit holder as entered in the Register shallforthwith notified in writing by relevant unit holder to the distributor company or transferagent.

(e) The Distribution Company and/or Management Company will be entitled to verifythe particulars given in the Account Opening Form. In case of any incorrect information,the application may be rejected if the applicant fails to rectify the discrepancy.

(f) If subsequent to receipt of the application by the Distributor, but prior to issue ofthe Units, the application is found by the Registrar or the Distributor to be incomplete orincorrect in any material manner, the Registrar or the Distributor will advise theapplicant in writing to remove the discrepancy, in the meanwhile the application will beheld in abeyance for fifteen days and in the event the discrepancy is not removed inthe said fifteen days, the amount will be refunded without any interest or mark-up.However, in the event Units have been issued and a material discrepancy isdiscovered subsequent to that, the Registrar or the Distributor will advise the applicantin writing to remove the discrepancy within fifteen days and if the investor, in theopinion of the Registrar, fails to remove the discrepancy without good cause, the Unitsshall be redeemed at the Redemption Price fixed on the date the Units are soredeemed. The Unit Holder shall not be entitled to any payment beyond theredemption value so determined.

(g) The Investor Account Opening Form can be lodged with any Distributor or directlylodged with the Management Company. No other person (including InvestmentFacilitators) is authorized to accept the forms or payment.

(h) The Management Company will make arrangements, from time to time, forreceiving Account Opening Forms from outside Pakistan and will disclose thesearrangements through its website and its Distributors and agents outside Pakistan.

5.5.3 Joint Application(a) Joint application can be made by up to four applicants. Such persons shall bedeemed to hold Units on principal holder basis. However, each person must sign theAccount Opening Form and submit a copy of Computerized National Identity Card,NICOP, Passport and other identification document and is also required to fulfill theFACTA and KYC requirements

(b) The principal named Holder shall receive all notices and correspondence withrespect to the account, as well as proceeds of any redemption, or dividendpayments. Such person’s receipt or payment into the person’s designated bankaccount shall be considered as a valid discharge of obligation by the Trustee and theManagement Company.

(c) In the event of death of the principal Holder, the person first in the order ofsurvivor(s) as stated in the Account Opening Form shall be the only person recognizedby the Trustee and the Management Company to receive all notices andcorrespondences with regard to the accounts, as well as proceeds of any redemptionrequests or dividend. Such person’s acknowledgement of receipt of proceeds shall beconsidered as the valid discharge of obligation by the Trustee and the Management


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Company.

Provided however the Trustee and/or the Management Company may at theirdiscretion request the production of a Succession Certificate from an appropriate Courtbefore releasing of redemption requests or dividends in cases of doubts or disputesamong the Joint Unit Holders and/or the legal heirs or legal representatives of thedeceased.

5.5.4 Purchase of Units(a) After opening an account an account holder may purchase Units of the Fundusing the Investment Application Form (HAML 02) attached to this Offering Document.Payment for the Units must accompany the form.

(b) Application for Purchase of Units shall be made by completing theprescribed Investment Application Form and submitting it to the authorized branches ofthe Distributor or to the Management Company together with the payment by cheque,bank draft, pay order or online transfer as the case may be in favor of Trustee BankAccount and crossed “Account Payee only” as specified below;

Demand draft or Pay order in favor of CDC Trustee –First Habib Islamic IncomeFund

Online transfer to Bank Account(s) of CDC Trustee –First Habib Islamic Income Fund

Cheque (account payee only marked in favor of CDC Trustee – First Habib IslamicIncome Fund

(c) The Management Company may also notify, from time to time, arrangementsor other forms of payment within such limits and restrictions considered fit by it withthe prior approval of Commission.

(d) Applicants must indicate their account number in the Investment Application Formexcept in cases where the Investor Account Opening Form is sent with the InvestmentApplication Form.

(e) The applicant must obtain on their registered mobile number a SMS and/ or onregistered email address an acknowledgment for the receipt of the application, otherdocuments and the demand-draft, pay-order, cheque or deposit slip as the case may be.However; applicant may ask to get the hardcopies of the same. In case where theapplicant does not have registered mobile number and email address, the ManagementCompany will send the acknowledgement through registered post at their registeredhome address.

(f) The Distribution Company and/or Management Company will be entitled to verifythe detail given in the Investment Form. In case of any incorrect information, theapplication may be rejected if the applicant fails to rectify the discrepancy (except fordiscrepancy in payment instrument, in which case application will be rejectedimmediately).

The Management Company will make arrangements, from time to time, for receivingInvestment Request Forms and payments from outside Pakistan and will disclosethese arrangements through its website and its Distributors and agents outsidePakistan.

5.5.5 Minimum Amount of InvestmentThe minimum amount of initial investment that is required to open a Unit Holder’saccount with the Management Company is Rs. 1,000/- (Rupees one Thousand only) forGrowth Units and Rs. 100,000/- (Rupees One Hundred Thousand only) for IncomeUnits. Subsequent to initial investment, the Unit Holders may invest minimum Rs.100/- (Rupees One Hundred only) per transaction for Growth Units and Rs.5,000/- for


32

Income Units. The Management Company reserves the right to alter the minimumamounts stated hereinabove after giving thirty days prior notice to the Unit Holders.However, enhancement in current minimum monetary investments shall not take effectretrospectively.

5.5.6 Determination of Purchase (Public Offer) Price(a) Units offered during the Initial period will be as specified in Clause 2.6.

(b) After the Initial Period, the Purchase (Offer) Price for the Unit offered throughPublic Offering, shall be determined from time to time pursuant to the Sub clause (c)hereafter and shall be announced by the Fund for Dealing Days during the periodwhen the Fund is open for subscription.

(c) The Purchase (Offer) Price shall be equal to the sum of:

(i) The Net Asset Value as of the close of the Business Day (Forward pricing);

(ii) Any Front-end Load as disclosed in this Offering Document.(ii) Such amount as the Management Company may consider an appropriate provisionfor Duties and Charges; and

(iii) Such amount as the Management Company may consider an appropriate provisionfor Transaction Costs.

(iv) Such sum shall be adjusted upward to the nearest paisa.

If such price exceed or falls short of the current value of the underlying assets by morethan five percent based on information available, the assets Management Companyshall defer dealing and calculate a new price and this new price would be applicablefor dealing of units.

(d) The Purchase (Offer) Price so determined shall apply to purchase requests,received by the Distributor or the Management Company during the BusinessHours on the Dealing Day on which the completely and correctly filled purchase of Unitsapplication form is received.

(e) The Purchase (Offer) Price determined by the Management Company shall bemade available to the public at the office and branches of the Distributors and will alsobe published daily on the Management Company’s and MUFAP’s website.

5.5.7 Allocation/ Issue of Units

(a) The Purchase Price determined shall apply to all Investment Request Forms,complete in all respects, received by the Management Company at its registeredaddress or by the Distributor at its Authorized Branch(s) during Business Hours on thatDealing Day. Any Investment Request Forms received after Business Hours will betransferred to the next Dealing Day.

(b) Units will be allocated at the Purchase Price as determined in clause 5.5.6. aboveand issued after realization of Funds in the bank account of the Fund.

(c) The Transfer Agent shall send an account statement or report to the Unit Holdereach time there is an activity in the account. Such statements or report shallbe sent by electronic means or ordinary mail to the Unit Holder’s address recorded inthe Register of Unit Holders.

(d) In case the Management Company announces a suspension of further issue ofUnits of Fund, it may allow existing Unit Holder to continue acquiring Units out of anydividend declared on the Units held.


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5.5.8 Issuance of Physical Certificates

(a) Unit Certificates will be issued only if requested by the Unit Holder.

(b) Unit Holder can apply for the issue of Certificate by completing theprescribed application form and submitting it to the relevant Distribution Companytogether with a fee at the rate of Rs. 100 per Certificate or any other amount asdetermined by the Management Company from time to time.

(c) The Certificate will be posted at the applicant's risk within 21 Business Days afterthe request for the Certificate has been made to the address of the Unit Holder or tothe address of the first named Joint Unit Holder, if the relevant Unit or Units are jointlyheld.

(d) The Certificate will be available in such denomination as Management Companyand the Trustee decide from time to time. Unless, the Unit Holder has instructed to thecontrary, the minimum number of Certificates will be issued.

(e) A Unit or any fraction thereof shall not be represented by more than oneCertificate at any one time.

5.5.9 Replacement of Certificates(a) The Transfer Agent or Management Company may replace Certificates, whichare defaced, mutilated, lost or destroyed on application received by them from theUnit Holder on the prescribed form on the payment of all costs and on such termsas to evidence, indemnity and security as may be required. Any defaced or mutilatedCertificate must be surrendered before a new Certificate is issued.

(b) The Unit Holder shall on application on prescribed form be entitled toconsolidate the entire holding in the Fund into one (01) Certificate upon surrender ofexisting Certificates.

(c) Each new issue of Certificates will require payment of Rs. 100 per Certificate,subject to revisions of fee from time to time by the Management Company.

5.5.10 Issuance of Units in Book Entry form in CDS

Unit Holder may obtain Units in Book Entry form in CDS if and / or when the Fundbecomes CDS eligible. The Issuance of Units in CDS shall be made in accordance withthe procedure laid down in CDCPL Regulations.

5.6 Procedure for Redemption of Units

5.6.1 Who Can Apply?All Unit Holders shall be eligible for redemption after the closure of the Initial Period. Afterthe Initial Period all Unit Holders are eligible to redeem the said Units.

5.6.2 Redemption Application Procedure

5.6.2.1 Request for Redemption of Units shall be made by completing theprescribed redemption form (HAML-03) and the same is received at the AuthorizedBranch or office of the Distributor on a Dealing Day during the Business Hours as may beannounced by the Management Company from time to time. The Distributor mayretain a copy of the Redemption Form and a copy may also be supplied to theRegistrar, if so required by the Management Company.

5.6.2.2 The Management Company may redeem only part of the Units comprisedin a Certificate and reissue a new Certificate for the remaining Units, however, inthe case where Certificate is not issued any number of Units may be redeemed by theUnite Holder thereof. The relevant Certificate shall accompany the application forRedemption of Units, if issued. At the discretion of the Management Companycertificate charges may apply for the reissued Certificate.

5.6.2.3 The Registrar with the consent of the Trustee may dispense with the productionof any Certificate that shall have become lost, stolen or destroyed upon compliance by


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the Unit Holder(s) with the like requirements to those arising in the case of anapplication by him for the replacement thereof.

5.6.2.4 In case of application for redemption by joint Unit Holders, unless otherwisespecified by the joint holders, such application should be signed by all the joint Holdersas per their specimen signatures provided at the time of opening of the account withinthe Unit Holder Register, through the investor account opening Form. However theTransfer Agent will follow any subsequent change in the account operating instructionrequired by the Unit Holder or Holders as the case may be.

5.5.2.5 The Distribution Company or the Registrar shall verify the particulars given in theapplication for Redemption of Units. The signature of any Unit Holder or joint Unit Holderon any document required to be signed by him under or in connection with theapplication for redemption of Units may be verified by Management Company orthe Registrar or otherwise authenticated to their reasonable satisfaction. In case ofsubmission of electronic on-line redemptions the Unit Holder’s user ID and password willauthenticate his identity.

The Unit Holder will be receiving a note through a SMS on registered mobile numberand/ or on registered email address confirming the receipt of the application forredemption. In case where the Unit Holder does not have registered mobile number andemail address, the Management Company will send the acknowledgement throughregistered post at their registered home address.

5.6.2.6 If subsequent to receipt of the redemption application by the Distributor, butprior to the redemption of the Units, the application is found by the ManagementCompany or the Registrar or the Distributor to be incomplete or incorrect in any materialmanner, the Management Company or Registrar or the Distributor will advise theapplicant to remove the discrepancy. In the meanwhile, the application will be held inabeyance for fifteen days. In the event the discrepancy is not removed in the saidfifteen days, the application for redemption will be cancelled treating the same as nulland void. The Unit Holder will then have to submit a fresh application for Redemption ofUnits. However, the Management Company may at its discretion cancel any suchrequest without allowing 15 days rectification, the Unit Holder will then have to submit afresh application for Redemption of Units.

5.6.2.7 The Management Company shall ensure all valid redemption requestsare paid based on ranking of the request in a queue.

5.6.2.8 The amount payable on redemption m a y be paid to the Unit Holder orprincipal Unit Holder by dispatching a cheque/ bank draft/ pay order for the amount tothe registered address of the Unit Holder or may be paid to the Unit Holder throughElectronic Bank transfer to the Unit Holder's designated bank account as mentioned inthe Investor Account Opening Form or Redemption form within six Business Days fromthe date of presentation of the duly completed Redemption form, electronic orotherwise, at the Authorized Branch or office of the Distributor or the ManagementCompany.

The Management Company may request the Trustee to disburse the redemptionproceeds to any third party/Authorized Representative upon specific or standinginstruction of the Unit Holder as the case may be

5.6.2.9 The Management Company may make arrangements through branches ofbanks to facilitate redemption of Units of the Unit Trust. A request for redemption ofUnits may also be made through the use of electronic means including but not limitedto such as Internet or ATM facilities under prior arrangement with the Trustee andseeking prior approval of the Commission. The Management Company may redeemappropriate number of units from the account of Unit Holder to cover any transactionprocessing charges applicable on the mode of payment selected by the Unit Holder.Please refer to the website of the Management Company for current level of charges.

5.6.2.10 The receipt of any amount payable in respect of the Units by the Unit Holder


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or any Joint Holder , as the case may be, shall be a good discharge to the Trusteeand the Management Company.

5.6.2.11 Application for Redemption of Units will be received at the authorized officesor branches of the Distributor on all Dealing Days. Where redemption requests on anyone Dealing Day exceed ten (10) percent of the total number of Units outstanding,such redemption requests in excess of ten (10) percent may be deferred in accordancewith the procedure elaborated in the Clause 5.12.4.5.6.2.12 On the occurrence of any circumstance specified in the Regulation or theDeed that may require the Fund should be suspended, the Management Companyshall suspend the Sale and Redemption of Units and the intimation of suspension shallbe made to the Unit Holders, the Trustee and the Commission according to theprocedure laid down in the Regulation.

5.6.3 Redemption of Units in Book Entry form in CDSUnit Holder may redeem their Units held in Book Entry form in CDS. The Redemption ofUnits in CDS shall be made in accordance with the procedure laid down in CDCPLRegulations.

5.7 Purchase (Public Offer) and Redemption (Repurchase) of Units outside Pakistan5.7.1 Subject to exchange control, SECP prior approval and other applicable laws,Rules and Regulations, in the event of arrangements being made by theManagement Company for the Purchase (Public Offer) of Units to persons not residingin Pakistan or for delivery in any country outside Pakistan, the price at which such Unitsmay be issued may include in addition to the Purchase (Public Offer) Price ashereinbefore provided a further amount sufficient to cover any exchange risk insurance,any additional stamp duty or taxation whether national, local or otherwise leviable inthat country in respect of such issue or of the delivery or issue of Certificates, or anyadditional costs relating to the delivery of certificates or the remittance of money toPakistan or any other cost in general incurred in providing this facility.

5.7.2 In the event that the Redemption Price for Units shall be paid in any countryoutside Pakistan, the price at which such Units may be redeemed may include as adeduction to the Redemption Price as hereinbefore provided a further amountsufficient to cover any exchange risk insurance and any additional stamp duty ortaxation whether national, local or otherwise leviable in that country in respect of suchpayment or redemption or any bank or other charges incurred in arranging thepayment or any other cost in general incurred in providing this facility. Providedhowever, neither the Management Company, nor the Trustee give any assurance ormake any representation that remittance would be allowed by the State Bank ofPakistan at the relevant time.

5.7.3 The currency of transaction of the Trust is the Pakistan Rupee and theManagement Company, Trustee or any Distributor are not obliged to transact thepurchase or redemption of the Units in any other currency and shall not be held liable,save as may be specifically undertaken by the Management Company, for receipt orpayment in any other currency or for any obligations arising there from.

5.8 Determination of Redemption (Repurchase) Price5.8.1 The Redemption (Repurchase) Price shall be equal to the Net Asset Value as ofthe close of Business Day (forward pricing) less:

(a) Any Back-end Load as per the details in this Offering Document; and

(b) Such amount as the Management Company may consider an appropriateprovision for Duties and Charges and other levies etc. and

(c) Such amount as the Management Company may consider an appropriate provisionfor Transaction Costs;


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Level of all back end loads shall be disclosed in the Offering Document. An increase inBack End load will require 90 days prior notice to the Unit Holder or any other period asspecified in the Regulations.

5.8.2 Being a forward Pricing Scheme, the Repurchase (Redemption) Price sodetermined shall apply to properly filled redemption application, complete in allrespects, received by the Distributor or the Management Company during theBusiness Hours on the Dealing Day on which a correctly and properly filledredemption application is received.

5.8.3 The Redemption Price determined by the Management Company shall be madeavailable for every Dealing day to the public at the office and branches of theDistributors and at the discretion of the Management Company may also be publishedin any daily newspaper widely circulated in Pakistan and will be published atManagement Company’s and MUFAP’s website.

5.9 Procedure for Requesting Change in Unit Holder Particulars5.9.1 Who Can Request Change?All Unit Holders are eligible to change their Unit Holder details if they so desire. For suchchange in particulars, a request shall be made via the Special Instructions Form (HAML06). These Forms may be obtained from Distributors or Investment Facilitators or from theManagement Company or through its website. However, if Units are held in CDSaccount then request should be made through CDS Participant or the Investor AccountService (IAS) with which the account is maintained, according to the procedure laiddown in CDC Regulations.

5.9.2 Application Procedure for Change in Particulars(a)Subject to the submission of Special Request Form and supporting documents to thesatisfaction of the Management Company, the Unit Holder may request any change inhis or her information kept in the Unit Holder Register. Changes will not be allowed inCNIC and Joint Holder.

i. Change in addressii. Nominee detailiii. Change in Bank Account detailsiv. Account Operating instructionsv. Frequency of profit paymentsvi. Systemic Conversion Option

(b)Fully completed Special Request/Instructions Form(s) have to be submitted by bothIndividuals and/or Institutional Investor(s). This Form should be delivered to any of theAuthorized Branches of the Distribution Companies or may be submitted to theManagement Company through an Investment Facilitator within Business Hours on aDealing Day.

(c) The applicant must obtain a copy of the Special Reques t/ Instructions Formsigned and duly verified by an Authorized Officer of the Distributor or ManagementCompany.

(d) The Distribution Company and /or Management Company will be entitled toverify the particulars given in the Special Request/Instructions Form. In case of anyincorrect information the application may be rejected if the applicant does not rectifythe discrepancy.

(e) The Unit Holder will be liable for any taxes, charges or duties that may be leviedon any of the above changes. These taxes, charges or duties may either berecovered by redemption of Unit Holder equivalent Units at the time of the servicerequest or the Management Company may require separate payment for suchservices.

(f) Unless the Joint Unit Holder(s) of Units have specified otherwise, all the JointUnit Holder(s) shall sign the Special Instructions Form for such Units.


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5.9.3 Transfer, Nomination, Transmission and Systemic Conversion Procedure

5.9.3.1 Unit Holder may, subject to the law, transfer any Units held by them to anyother person. The transfer shall be carried out after the ManagementCompany/Transfer Agent has been satisfied that all the requisite formalities including thepayment of applicable taxes and duties have been complied with.

5.9.3.2 Both the transferor and the transferee must sign every instrument of transferand the transferor shall be deemed to remain the Holder of the Units transferred until thename of the transferee is entered in the register. Every instrument of transfer must beduly completed in all respects including affixation of transfer stamps of the requisitevalue.

5.9.3.3 Where Certificates have been issued, the Management Company / TransferAgent with the consent of the Trustee may dispense with the production of anyCertificate that shall have become lost, stolen or destroyed upon compliance by theUnit Holder(s) with the like requirements to those arising in the case of an applicationby him for the replacement thereof as provided in this Offering Document. TheManagement Company or the Transfer Agent shall retain all instruments of transfer.

5.9.3.4 The Transfer Agent shall, with the prior approval of the Management Companyor the Management Company itself be entitled to destroy all instruments of transfer orthe copies thereof, as the case may be, which have been registered at any time afterthe expiration of twelve years from the date of registration thereof and all theCertificates which have been cancelled at any time after the expiration of ten yearsfrom the date of cancellation thereof and all registers, statements and other recordsand documents relating to the Trust at any time after the expiration of ten years fromtransmission to the Trust. The Trustee or the Management Company or the Transfer Agentshall be under no liability, whatsoever, in consequence thereof and it shall conclusivelybe presumed in favor of the Trustee or the Management Company or the TransferAgent that every Unit of Transfer so destroyed was a valid and effective instrument dulyand properly registered by the Trustee or the Management Company or the TransferAgent and that every Certificate so destroyed was a valid Certificate duly andproperly cancelled, provided that (i) this provision shall apply only to the destruction ofa document in good faith and without notice of any claim (regardless of the partiesthereto) to which the document may be relevant; (ii) nothing in this sub-clauseshall impose upon the Trustee or the Management Company or the Transfer Agentany liability in respect of the destruction of any document earlier than as aforesaid or inany case where the conditions of provision (i) above are not fulfilled. Reference hereinto the destruction of any document includes reference to the disposal thereof in anymanner. Complete list of unclaimed dividends will be maintained by AMCs/Wakeeland shall not be destroyed. Unit Holder may nominate any successor/nominee fortransmission, subject to all legal requirements, in case of the decease of Unit Holder.

5.9.3.5 Transmission of Units to successors in case of inheritance or distribution of theestate of a deceased Unit Holder shall be processed by the Transfer Agent or theManagement Company itself as Registrar after satisfying as to all legalrequirements such as intimation of death of deceased Unit Holder along-with certifiedcopy of death certificate, indemnity from nominee along-with copy of CNIC ofnominee and deceased Unit Holder, original unit certificate (in case of physicalcertificate) etc. If considered necessary the Management Company may also requireeither heirship or succession certificate for the purpose of determining entitlement of thedeceased Unit Holder’s property. The legal costs and taxes, if any, shall be borne andpaid by the transferees. However, the processing fee shall not be payable by successorsor the beneficiaries of the estate in the case of transmission. The ManagementCompany shall pay the relevant processing fee to the Transfer Agent.

5.9.3.6 A Unit Holder may convert the Units of the Scheme into Units of another schememanaged by the Management Company by submitting a form designated for thispurpose either physically or electronically. Notwithstanding anything contained in thisOffering Document, the Offer Prices applicable on the conversion shall be the priceapplicable for the day on which form is submitted. For the purpose of conversion


38

transaction applicable Cut Off timings of the respective Schemes shall be applicable.The Transfer Agent or Management Company itself shall carry out the conversion aftersatisfying that all the requisite formalities have been fulfilled and payment of theapplicable taxes, fees and/or load, if any, has been received. The ManagementCompany may impose a time limit before which conversion may not be allowed.

5.9.3.7 A Unit Holder may merge the Units which he/she has invested with twofolio/registration numbers into one folio/ registration number. The Transfer Agent shallcarry out the merger after satisfying that all the requisite formalities have beencompleted and payment of applicable taxes and fee, if any, has been received.

5.10 Partial TransferPartial transfer of Units covered by a single Certificate is permitted provided that in caseof physical certificates issued, the Unit Holder must apply for splitting of the unitcertificate representing the partial amount and then the new certificate shall beapplied for transfer.

5.11 Procedure for Pledge / Lien / Charge of Units

5.11.1 Who Can Apply?(a) All Unit Holders are eligible to apply for pledge / lien / charge of Units if they sodesire. Such Pledge / Lien / Charge can be made via the Pledge of Units Form [05] .These forms may be obtained from Distributors or Investment Facilitators or fromthe Management Company or through its website. However, if Units are held in CDSaccount then request should be made to the CDS Participant or the InvestorAccount Service (IAS) with which the account is maintained, according to theprocedure laid down in CDC Regulations.

(b) Any Unit Holder either singly or with Joint Unit Holder(s) (where required) mayrequest the Management Company or Transfer Agent to record a pledge / lien ofall or any of his / her/ their Units in favor of any third party legally entitled to invest insuch Units in its own right. The Management Company or Transfer Agent shall registera lien on any Unit in favor of any third party with the consent of the ManagementCompany. However, the lien shall be valid only if evidenced by an accountstatement or letter issued by the Management Company or Transfer Agentwith the Units marked in favor of the Pledgee. The onus for due process having beenfollowed in registering a lien shall lie with the party claiming the lien.

(c) The lien once registered shall be removed by the authority of the party in whosefavor the lien has been registered or through an order of a competent court. Neither theTrustee, nor the Management Company, nor the Transfer Agent, shall be liable forensuring the validity of any such pledge / charge/ lien. The disbursement of any loan orundertaking of any obligation against the constitution of such pledge/charge/lien byany party shall be at the entire discretion of such party and neither the Trustee nor theManagement Company and the Transfer Agent shall take any responsibility in thismatter.

(d)Payments of cash dividends or the issue of bonus Units and redemption proceedsof the Units or any benefits arising from the said Units that are kept under lien / charge /pledge shall be paid to the order of the lien / charge / pledge holder’s bank accountor posted to the registered address of Pledgee mentioned in the Pledge Form and/orInvestor Account Opening Form submitted. In case of Units are pledged throughCentral Depository System, payments of cash dividends or the issuance of bonus Unitsgoes to the Pledgor as per Central Depositories Act.

(e) The Distribution Company and / or Management Company will be entitled toverify the particulars given in the Pledge Form. In case of any incorrect informationthe application may be rejected if the applicant does not rectify the discrepancy.

(f) Fully completed Pledge of Units Form has to be submitted by both Individuals and/ornon-individuals Unit Holders. This Form should be delivered to any of the AuthorizedBranches of the Distribution Companies or may be submitted to the ManagementCompany directly or through an Investment Facilitator within Business Hours on a DealingDay.


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(g) All risks and rewards, including the right to redeem such Units shall vest with thepledge / lien / charge holder. This will remain the case until such time as the pledge /lien / charge holder in writing to the Management Company instructs otherwise.

5.12 Temporary Change in Method of Dealing, Suspension of Dealing and Queue System

5.12.1 Temporary Change in the Method of DealingUnder the circumstances mentioned in Clauses 5.12.2 and 5.12.3, subject tocompliance with Regulations (having regard to the interests of Unit Holders), theManagement Company may request the Trustee to approve a temporary change inthe method of dealing in Units.

A permanent change in the method of dealing shall be made after expiry of atleast one month’s notice to Unit Holders and with the approval of Trustee.

5.12.2 Suspension of Fresh Issue of UnitsThe Management Company may, under the following circumstances, suspend issue offresh Units.

The situation of Force Majeure as defined in this Offering Document;A situation in which it is not possible to invest the amount received against

issuance of fresh Units or

Any other situation in which issuance of fresh Units is, in Management Company’sopinion, against the interests of the existing/remaining Unit Holders.

Such suspension may however not affect existing Unit Holders for the issue of bonus Unitsas a result of profit distribution The Management Company shall announce the detailsof circumstances at the time a suspension of fresh issue is announced. The ManagementCompany shall immediately notify SECP and Trustee if issuance of Units is suspendedand shall also have the fact published, immediately following such decision, in thenewspapers in which the Fund’s prices are normally published.

In case of suspension of redemption of Units due to extraordinary circumstances theissuance of Units shall also be kept suspended until and unless redemption of units areresumed Investment application form received on the day of suspension will not beprocessed and the amount received shall be returned to the investor.

5.12.3 Suspension of Redemption of Units

The Redemption of Units may be suspended during extraordinary circumstances/ ForceMajeure.

Redemption requests received on the day of the suspension shall be rejected.

5.12.4 Queue SystemIn the event redemption requests on any day exceed ten percent (10%) of the Unitsin issue, the Management Company may invoke a Queue System whereby requestsfor redemption shall be processed on a first come first served basis for up to tenpercent (10%) of the Units in issue. The Management Company shall proceed to selladequate assets of the Fund and / or arrange shariah compliant borrowing as itdeems fit in the best interest of all Unit Holders and shall determine the redemptionprice to be applied to the redemption requests based on such action. Where it is notpractical to determine the chronological ranking of any requests in comparison toothers received on the same Dealing Day, such requests shall be processed on basisproportionate to the size of the requests. The Management Company shall provide allredemption requests duly timed and date stamped to the Trustee within 24 hours ofreceipt of any such request following the queue system. The requests in excess of tenpercent (10%) shall be treated as redemption requests qualifying for being processed onthe next Dealing Day at the price to be determined for such redemption requests.


40

However, if the carried over requests and the fresh requests received on the nextDealing Day still exceed ten percent (10%) of the Units in issue, these shall once againbe treated on first come first served basis and the process for generating liquidity anddetermining the redemption price shall be repeated and such procedure shall continuetill such time the outstanding redemption requests come down to a level below tenpercent (10%) of the Units then in issue.

5.12.5 Winding up in view of Major RedemptionsIn the event the Management Company is of the view that the quantum ofredemption requests that have built up are likely to result in the Fund being run down toan unsustainable level or it is of the view that the sell-off of assets is likely to result ina significant loss in value for the Unit Holders who are not redeeming, it may announcewinding up of the Fund. In such an event, the Queue System, if already invoked, shallcease to apply and all Unit Holders shall be paid after selling the assets and determiningthe final Redemption Price. However, interim distributions of the proceeds may bemade if the Management Company finds it feasible. In case of shortfall, neither theTrustee nor the Management Company shall be liable to pay the same.

6. DISTRIBUTION POLICY6.1 Declaration of DividendThe Management Company shall decide as soon as possible but not later than forty-five days after the Accounting Date / interim period whether to distribute among UnitHolders, profits, either in form of bonus Units or cash dividend, if any, available for thedistribution at the end of the Accounting Period and shall advise the Trustee of theamount of such distribution per Unit. The Fund will comply with regulatory and taxationrequirements and the distribution policy may be amended accordingly.

The Management Company on behalf of the Scheme shall, for every accountingyear, distribute by way of dividend to the Unit Holders, not less than ninety per cent ofthe accounting income of the Collective Investment Scheme received or derivedfrom sources other than capital gains as r e d u c e d by such expenses as arechargeable to a Collective Investment Scheme under the Regulations.

For the purpose of this Clause the expression “accounting income” means incomecalculated in accordance with the requirements of International AccountingStandards (IAS) as are notified under the Companies Ordinance, 1984, the Regulationsand the directives issued by SECP. Wherever the requirement of Regulations or thedirectives issued by SECP differs with the requirement of IAS, the Regulations and thesaid directives shall prevail.

6.2 Determination of Distributable IncomeThe amount available for distribution in respect of any Accounting Period shall bedetermined in accordance with the regulatory and taxation requirement as may beapplicable from time to time.

All the receipts deemed by the Management Company to be in the nature ofcapital accruing from Investments shall not be regarded as available for distributionbut shall be retained as part of the Fund Property, provided that and subject to theregulatory and taxation requirements such amounts out of the sale proceeds of theInvestments and all other receipts as deemed by the Management Company to be inthe nature of the net realized appreciation may be distributable to the Unit Holdersby the Trustee upon instructions of the Management Company and shall thereaftercease to form part of the Fund Property.

6.3 Payment of DividendAll payments for dividend shall be made through payment instruments or transfer of Fundsto the Unit Holder’s designated bank account or the charge-holders designated bankaccount in case of lien / pledge of Units as the case may be or through any other modeof payment with the approval of Commission and such payment shall be subject to theRegulations and any other applicable laws. In case of pledged Units the dividend shall be


41

reinvested in pledgor’s account after deducting applicable taxes and pledge shall bemarked in favor of charge holder.

6.4 Dispatch of Dividend AdviceDividend advices and/or Account Statements shall be dispatched to the Unit Holders orthe charge-holders at their registered addresses.

6.5 Reinvestment of DividendThe Management Company shall give the Unit Holders the option at the time ofopening of Unit Holder Account (via the Investor Account Opening Form) or throughInvestment Form within the Unit Holders Register to receive new Units instead of cashdividend. The Unit Holders shall be entitled to change such option.

6.6 Bonus UnitsThe Management Company may decide to distribute, wholly or in part, the distributableincome in the form of stock dividend (which would comprise of the Bonus Units of theTrust) if it is in the interest of Unit Holders. After the fixing of the rate of bonusdistribution per Unit, in case of distribution in the form of Bonus Units, the ManagementCompany shall, under intimation to the Trustee, issue additional Units issued in thename of the Unit Holders as per the bonus ratio. The Bonus Units would rank pari passuas to their rights in the Net Assets, earnings and receipt of dividend and distribution withthe existing Units from the date of issue of these Bonus Units. The account statement orUnit Certificate shall be dispatched to the Unit Holder within fifteen days of the issue ofBonus Units.

6.7 Encashment of Bonus UnitsThe Management Company shall give the Unit Holder(s) the option at the time ofopening of Unit Holder Account (via the Investor Account Opening Form) or throughInvestment Form to encash bonus Units. In such case the bonus Units issued to the creditof such Unit Holder(s) shall be redeemed at the ex-dividend NAV as calculated on theBusiness Day immediately preceding the first day of the book closure announced forsuch purpose and proceeds after such deduction of applicable law s h a l l becredited in accordance with the normal procedure already detailed above forRedemption of Units.

6.8 Closure of RegisterThe Management Company may close the Register by giving at least seven (7) daysnotice to Unit Holder provided that the time period for closure of register shall notexceed six (6) working days at a time and whole forty five days in a FinancialYear. During the closure period, the sale, redemption, conversion of Units or transfer ofUnits will be suspended. Notice for closure of register should be published in twonewspapers (Urdu and English language) having circulated all over Pakistan.

7. FEE AND CHARGES7.1 Fees and Charges Payable by an InvestorThe following fees and charges shall be borne by the Investor:

Front-end Load

Front end Load is a part of Sales Load which may be included in the offer price of theUnits. The remuneration of Distributors shall be paid from such Load and if the Front-endLoad is insufficient to pay the remuneration of the Distributors, the Management Companyshall pay the amount necessary to pay in full such remuneration and no charges shall bemade against the Fund Property or the Distribution Account in this respect.

The Management Company may at its discretion charge different levels of Load as perAnnexure ''A''. Any change in Front-end Load shall be done through an addendum to theOffering Document after seeking prior approval of the Commission.


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A Distributor located outside Pakistan may if so authorized by the Management Companyand the Trustee retain such portion of the Front-end Load as is authorized by theManagement Company and transfer the net amount to the Trustee, subject to the law forthe time being in force.

The issue price applicable to Bonus Units issued by way of dividend distribution or issue ofUnits in lieu of cash distribution shall not include any sales or processing charge.

Back-end LoadBack end Load deducted from the Net Asset Value in determining the Redemption Price;provided however that different levels of Back-end Load may be applied to differenttypes of Units, but Unit Holders within a type shall be charged same level of back endload. Management Company may change the current level of Back-end Load aftergiving 90 days prior notice to the Unit Holder through newspaper (either Urdu or EnglishNewspaper) and via post and the unit holders shall be given an option to exit at theapplicable NAV without charge of back end load as specified in the Regulation.

The current level of Back-end Load is indicated in Annexure ''A''.

7.1.1 Other ChargesTransfer of Units from one owner to another shall be subject to a Processing charge asreferred in Annexure B at the date the request is lodged, which shall be recovered fromthe transferee. However, the processing charge shall not be payable by successors in thecase of inheritance or distribution of the estate of a deceased Unit Holder.Subject to consent of the Unit Holder at the time of executing any transaction, theManagement Company may recover reasonable transactional charges either from thetransaction proceeds or from the account of the Unit Holder by redeeming appropriatenumber of units.

Units issued to an Account holder through conversion from another scheme run by theManagement Company shall be issued at a price based on the Net Asset Value on thatdate.

7.1.2 Expenses borne by the Management Company and the TrusteeThe Management Company and Trustee shall bear all expenditures in respect of theirrespective secretarial and office space and professional management servicesprovided in accordance with the provisions of the applicable law. Neither theManagement Company nor the Trustee shall make any charge against the UnitHolders nor against the Trust Property nor against the Distribution Account for theirservices nor for expenses, except such expenses or fees as are expressly authorizedunder the provisions of the Regulations and the Deed to be payable out of TrustProperty.

Any cost associated with sales, marketing and advertisement of collective investmentsschemes shall not be charged to the collective investment schemes except as may beallowed by the Commission.

7.1.3 Remuneration of Distribution Company / Investment Agent / Investment FacilitatorThe Distribution Company employed by the Management Company will be entitled toa remuneration payable by the Management Company out of its own resources and/orfrom Front End Load on terms to be agreed between the Management Company andthe Distribution Company. The Investment Facilitator/Investment Adviser/Sales Agentemployed by the Management Company will be entitled to a remuneration payableby the Management Company out of its own resources.

Distributors located outside Pakistan may, if so authorized by the Management


43

Company, be entitled to remuneration (from Management Company’s own resources)on terms to be agreed between them and the Management Company, subject to thelaw for the time being in force.

7.2 Fees and Charges Payable by the FundThe following expenses shall be borne by the Fund:

7.2.1 Remuneration of the Management CompanyThe remuneration shall begin to accrue from the close of the Initial Offering Period. Inrespect of any period other than an Annual Accounting Period, such remuneration shallbe prorated on the basis of the actual number of days for which such remuneration hasaccrued in proportion to the total number of days in the Annual Accounting Periodconcerned.

Current level Management Fee payable on monthly basis ( in ar rears) is disclosed inAnnexure “A”. Any increase in the current level of Management Fee, providedit is within the maximum limit prescribed in the Regulations shall be subject priorapproval of SECP and after to giving a ninety (90) days prior notice to the unit holdersand the unit holders shall be given an option to exit at the applicable NAV withoutcharge of any exit load.

7.2.2 Remuneration of the TrusteeThe Trustee shall be entitled to a monthly remuneration out of the Trust Propertydetermined in accordance with Annexure “B”.

The remuneration shall begin to accrue following the expiry of the Initial Period. For anyperiod other than an Annual Accounting Period such remuneration will be prorated onthe basis of the actual number of days for which such remuneration has accrued inproportion to the total number of days in an Annual Accounting Period concerned.Any upward change in the remuneration of trustee from the existing level shall requireprior approval of the Commission.

7.3 Formation CostsAll preliminary and floatation expenses of the Fund including expenses incurred inconnection with the establishment and authorization of the Fund, includingexecution and registration of the Constitutive Documents, issue, legal costs, printing,circulation and publication of the Offering Document, and all expenses incurredduring and up to the Initial Offering Period subject to a maximum of one per cent ofpre-IPO capital of the Fund or Rupees five million, whichever is lower, shall beborne by the Fund subject to the audit of expenses and amortized over a period ofnot less than five years or within the maturity of the Fund whichever is lower. This costshall be reimbursable by a collective investment scheme to an AMC/Wakeel subject tothe audit of expenses. The Formation Cost shall be reported by the ManagementCompany to the Commission and the Trustee giving their break-up under separateheads, as soon as the distribution of the securities is completed.

7.4 Other costs and expensesOnly the expenses allowed under the applicable laws shall be paid out of the FundProperty. Following are the example of charges which shall be payable out of the FundProperty, however the expenses chargeable to Fund Property shall be in accordance withthe applicable laws:

(i) Custody, Brokerage, Transaction Costs of investing and disinvesting of the FundProperty.

(ii) All expenses incurred by the Trustee in effecting the registration of allregisterrable property in the Trustee’s name.

(iii) Legal and related costs incurred in protecting or enhancing the interests ofthe Unit Holders.

(iv) Bank charges, shariah compliant borrowing costs;(v) Auditors' Fees and out of pocket expenses.


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(vi) printing costs and related expenses for issuing Fund’s quarterly, half yearly andannual reports.

(vii) Fundrating Fee payable to approved rating agency.(viii) Any amount which the Shariah Advisor may declare to be Haram and to be paid

to Charity.(ix) registrar services, accounting, operation and valuation services related to CIS

maximum up to 0.1% of average annual net assets of the Scheme or actualwhichever is less.

(x) Listing Fee including renewals payable to the Stock Exchange(s) on which Unitsmay be listed.

(xi) Fee pertaining to the Fund payable to the Commission.(xii) Taxes, fees, duties if any, applicable to the F u n d and on its income, turnover

and/or its properties including Sales taxe levied offered by Asset Management(xiii) Charges and levies of stock exchanges, national clearing and settlement

company, CDC charges.(i) (Any amount which the Shari’ah Advisor may declare to be Haram and to be paid to

approved charity institutions.)(xiv) Any other expense permissible under Rules and Regulations from time to time

and/or permitted by the Commission.(xv) Shariah Advisory Fee(xvi) Total Expense Ratio: Total Expense Ratio shall be capped up to 2% or any other limit

as may be directed by SECP from time to time.

8. TAXATION

8.1 Taxation on the Income of the Fund

8.1.1 Liability for Income TaxThe following is a brief description of the Income Tax Ordinance, 2001, applicable inrespect of the Fund. This section is for advice only and potential investors shouldconsult their tax experts for their liability with respect to taxation on income frominvestment in the Fund. This part does not cover tax liability of non-Pakistani residentinvestors with respect to taxes in their own jurisdiction.

Under the Tax Law in Pakistan, the definition of a public company includes a trustformed under any law for the time being in force. The Fund will be regarded as apublic company liable to a tax rate applicable to a public company.

The income of the Fund will accordingly be taxed at the following rates:(i) Dividend income as applicable according to the relevant law;(ii) Capital Gains Tax as applicable according to the relevant law.(iii) Return from all other sources / instruments are taxable at the rate applicable to apublic company.

8.1.2 Liability for Income Tax if Ninety Percent of Income is distributedNotwithstanding the tax rate given above, the income from the Fund will be exemptedfrom tax if not less than 90% of the income for the year as reduced by capital gainswhether realized or unrealized is distributed amongst the Unit Holders as dividend.

The Fund will distribute not less than 90% of its income received or derived fromsources other than realized or unrealized capital gains as reduced by suchexpenses as are chargeable to the Fund.

8.2 Withholding taxUnder the provision of Clause 47(B) of part (IV) of second schedule of the income TaxOrdinance 2001, the Fund’s income from dividend from securities or instruments ofcompanies, organizations and establishments, return on (Riba free)deposits withbanks/financial instititions, return from contracts, will not be subject to any withholdingtax.


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8.3 Zakat on FundThe Fund is Sahib-e-Nisab under the Zakat and Ushr Ordinance, 1980. The balance in thecredit of Shariah compliant account, or similar account with a bank standing on the firstday of Ramzan-ul-Mubarak will be subjected to Zakat deduction @ 2.5%.

8.4 Taxation and Zakat on Unit Holders

8.4.1 Taxation on Income from the Fund of the Unit HolderThe following is a brief description of the Income Tax Ordinance, 2001, applicable inrespect of Unit Holder of the Fund. This section is for advice only and potential investorsshould consult their tax experts for their liability with respect to taxation on income frominvestment in the Fund. This part does not cover tax liability of non-Pakistani residentinvestors with respect to taxes in their own jurisdiction.

8.4.2 Unit Holders of the Fund will be subject to tax on dividend income distributed bythe Fund at the applicable tax rate as mentioned in Income Tax Ordinance, 2001 ondividend income distributed by the Fund.

The tax deducted on dividend will be the final tax and the payer will be required towithhold the amount of tax at source from payment of dividend except payment to thebanking Companies.

8.4.3 Capital gain arising from redemption of Units of the Fund will be subject to tax atthe applicable tax rate as mentioned in Income Tax Ordinance 2001.

8.4.4 Unitholders may be liable to pay tax even though they may not have earned anygain on their investment as return of capital through distribution to investors is alsotaxable as per Income Tax Ordinance, 2001.

8.4.5Unit Holders who are exempt from income tax may obtain exemption certificatefrom the Commissioner of Income Tax and provide the same to the ManagementCompany and/or Transfer Agent and on the basis of Exemption Certificate income taxwill not be withheld.

8.4.6 Tax Credit to Unit HoldersUnit Holders other than a company shall be entitled to a tax credit under Section 62 ofthe Income Tax Ordinance, 2001, on purchase of new Units

8.4.7 ZakatUnits held by resident Pakistani Unit Holders shall be subject to Zakat at 2.5% of the valueof the Units under Zakat and Ushr Ordinance, 1980, (XVII of 1980), except thoseexempted under the said Ordinance. Zakat will be deducted at source from theredemption proceeds. Above deduction will not be made if Unit Holder providesdeclaration in due course of time to the Management Company.

8.5 DisclaimerThe tax and Zakat information given above is based on the Management Company’stax advisor’s interpretation of the law which, to the best of the ManagementCompany’s understanding, is correct. Investors are expected to seek independentadvice so as to determine the tax consequences arising from their investment in theUnits of the Fund. Furthermore, tax and Zakat laws, including rates of taxation and ofwithholding tax, are subject to amendments from time to time. Any such amendmentsin future shall be deemed to have been incorporated herein.

9. REPORTS TO UNIT HOLDERS9.1 Account StatementThe Management Company/Transfer Agent shall send directly to each Unit Holderan account statement each time there is a transaction in the account.

The Management Company/Transfer Agent shall provide account balance and/or


46

account activities through electronic mode to Unit Holder, who opted for such service.

The Unit Holder will be entitled to ask for copies of his account statement on anyDealing Day within Business Hours by applying to the Management Company/TransferAgent in writing and providing such fee as specified that the Management Companymay notify from time to time.

9.2 Financial Reporting(a) The Management Company shall prepare and transmit the annual reportphysically (or through electronic means) in such form and manner as set out in SECPSRO 787 of 2014 and Regulations as amended or substituted from time to time.(b)The Management Company shall prepare and transmit quarterly reports physically(or through electronic means or on the web subject to SECP approval) in such formand manner as set out in SECP SRO 787 of 2014 and Regulations as amended orsubstituted from time to time.

9.3 Trustee ReportThe Trustee shall report to the Unit Holder, to be included in the annual and secondquarter Financial Reports issued by the Management Company to the Unit Holders, asto whether in its opinion the Management Company has in all material respectsmanaged the Fund in accordance with the provisions of the Regulations, theConstitutive Documents and if the Management Company has not done so, therespect in which it has not done so and the steps the Trustee has taken in respectthereof.

9.4 Fund Manager ReportThe Management Company shall prepare Fund Manager Report each month as perguideline issued by MUFAP and transmit the same to the Unit Holders and alsomade available at their web site latest by 7th of each month.

10. WARNING AND DISCLAIMER10.1 Warning10.1.1 In case of any apprehension regarding the contents of this OfferingDocument, consultation of the bank manager, Legal/Shari’ah/Fianncial advisor isadvised.

10.1.2 The price of the Units of this Fund and the income of this Fund (from whichdistributions to Unit Holders is made) may increase or decrease. Investment in this Fundis suitable for investors who have the ability to take the risks associated with financialmarket investments. Capital invested in the financial markets could in extremecircumstances lose its entire value. The historical performance of this Fund, other Fundsmanaged by the Management Company, the financial markets, or that of any onesecurity or transaction included in the Fund’s portfolio will not necessarily indicate futureperformance.

Before making any investment decision, investor should review the latest monthly fundmanager report and financial statements of the Scheme particularly the details of non-complaint investment and Risk Factors.

10.2 Disclaimer10.2.1 The Units of the Fund are not bank deposits and are neither issued by, insuredby, obligation of, nor otherwise supported by SECP, any Government Agency,Trustee (except to the extent specifically stated in this document and the Trust Deed)or any of the shareholders of the Management Company or any of the Pre-IPO Investorsor any other bank or financial institution. The portfolio of the Fund is subject to marketrisks and risks inherent in all such investments.

10.2.2 Fund’s target return/ dividend range cannot be guaranteed. Fund’s Unit price isneither guaranteed nor administered/managed; it is based on the NAV that may go upor down depending upon the factors and forces affecting the capital markets andinterest rates.


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11.GENERAL INFORMATION11.1 Accounting Period / Financial Year of the FundAccounting Period means a period ending on and including an accounting date andcommencing (in case of the first such period) on the date on which the Trust Propertyis first paid or transferred to the Trustee and (in any other case) from the next day of thepreceding accounting period.

Annual Accounting Period means the period commence on 1st July and shall end on30th June of the succeeding calendar year.

11.2 Inspection of Constitutive DocumentsThe copies of constitutive documents, such as the Deed and the Offering Document,can be inspected free of charge at the addresses given below, however suchdocuments shall also be available on the web site of the Management Company:

Habib Asset Management Limited1 s t F loor , Imper ia l Cour t , Dr .Z iauddin Ahmed Road, Karachi

11.3 Transfer of Management Rights of the FundThe management rights of the Fund may be transferred to another ManagementCompany upon the occurrence of any of the following events in accordancewith the procedure laid down in the Regulation, the Deed and the Directive issued bythe Commission;-

(i) the Management Company goes into liquidation, becomes bankrupt or has aliquidator appointed over its assets, or its license has been cancelled or does not holdvalid license;

(ii) where the Management Company is unable to remove the suspension ofredemption of Units of the Fund within the fifteen business days of suspension and theUnit Holders representing at least three fourth in value of total outstanding Units ofthe concerned scheme pass a resolution or have given consent in writing that thescheme be transferred to another Management Company;

(iii) if in the opinion of the Commission further management of the Fund by the existingManagement Company is detrimental to the interest of the Unit Holders, theCommission may direct the Trustee to transfer the Fund to another ManagementCompany.

(iv) If the Management Company may retire voluntarily with the prior written consent ofthe Commission.

11.4 Extinguishment/Revocation of the FundThe Fund may be extinguished by the occurrence of any of the following events inaccordance with the procedure laid down in the Regulation, the Deed and theDirective issued by the Commission;-

(i) the Fund has reached its maturity date as specified in the Deed;

(ii) where the Management Company is unable to remove the suspension ofredemption of Units of the Fund within the fifteen business days of suspension and theUnit Holders representing at least three fourth in value of total outstanding Units ofthe concerned scheme pass a resolution or have given consent in writing that thescheme be revoked;

(iii) where the Management Company goes into liquidation, becomesbankrupt or has a liquidator appointed over its assets, or its license has been cancelledor does not hold valid license;


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(iv) in the opinion of the Management Company the scheme is not commerciallyviable or purpose of the scheme cannot be accomplished subject to theconsent of Trustee;

(v) The Management Company subject to regulatory approval, may announcewinding up of the Trust in the event redemption requests build up to a level where theManagement Company is of the view that the disposal of the Trust Property to meetsuch redemptions would jeopardize the interests of the remaining Unit Holder(s) and thatit would be in the best interest of all the Unit Holder(s) that the Trust be wound up.

(vi) On occurrence of any event or circumstances which, in the opinion of the Trustee,requires the Fund to be revoked; and(vii) where the Commission deems it necessary to revoke the Fund so directs eitherTrustee or the Management Company in the interest of Unit Holders;

11.5 Procedure and manner of Revocation of the FundRevocation of the Fund shall be done in accordance with the procedures and inthe manner as mentioned in the Regulations or through circulars / guidelinesissued by the SECP from time to time.

11.6 Distribution of proceeds on RevocationIn case of Revocation of the Fund the Trustee shall according to the procedure laiddown in Regulations refund the net proceeds to the Unit Holders in proportion to thenumber of units held by them.

12.GLOSSARYUnless the context requires otherwise the following words or expressions shall have themeaning respectively assigned to them:

“Accounting Date” means the thirtieth day of June in each year and any interimdate on which the financial statements of the Scheme are drawn up. Provided that theManagement Company may, with the written consent of the Trustee and afterobtaining approval from the Commission and the Commissioner of Income Tax maychange such date to any other date and such change shall be intimated to theCommission.

“Account Opening / Investment Account Opening Form” means standardized formprescribed by the Management Company to be duly filled by the investors at the timeof opening an account with the Management Company.

“Accounting Period” means a period ending on and including an accounting date andcommencing (in case of the first such period) on the date on which the Trust Property isfirst paid or transferred to the Trustee and (in any other case) from the next day of thepreceding accounting period.

“Administrative Plans” means investment plans offered by the Management Companyand approved by the Commission, where such plans allow investors a specificinvestment strategy in any one or a combination of Schemes managed by theManagement Company in accordance with the conditions specified by SECP.

“Annual Accounting Period” or “Financial Year” means the period commence on 1stJuly and shall end on 30th June of the succeeding calendar year.

“Asset Management Company / AMC / Wakeel” means an asset ManagementCompany as defined in the Rules and Regulations.

“Auditor” means the Auditor of the Trust appointed by the Management Company,with the consent of the Trustee, as per the Regulations.

“Authorized Branches” means those Branches of Distributors or Distribution Companieswhich are allowed by the Management Company to deal in Units of the Funds


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managed by the Management Company.

“Authorized Broker” means those Brokers which are authorized to deal in GovernmentSecurities.

“Authorized Investments”Authorized Investments are those as defined in the clause 3.2 of this Offering Document

“Back-end Load” means the charge deducted from the Net Asset Value in determiningthe Redemption Price; provided however that different levels of Back-end Load may beapplied to different classes of Units, as specified in this document.“Bank” means institution(s) providing banking services under the Banking Companies

Ordinance, 1962, or any other regulation in force for the time being in Pakistan, or ifoperating outside Pakistan, under the banking laws of the jurisdiction of its operationoutside Pakistan.

“Bank Accounts” means those account(s) opened and maintained for the Trust by theTrustee at Shariah compliant Banks, the beneficial ownerships in which shall vest in theUnit Holder(s).

“Broker” means any person engaged in the business of effecting transactions insecurities for the account of others.

“Business Day” means any day on which scheduled banks/stock exchanges areopen for business in Pakistan.

“Certificate” means the definitive certificate acknowledging the number of Unitsregistered in the name of the Unit Holder issued at the request of the Unit Holderpursuant to the provisions of the Trust Deed.

“Connected Person” shall have the same meaning as assigned in the Rules andRegulations.

“Constitutive Documents” means the Trust Deed or such other documents as defined inthe Regulations.

“Contingent Load” means Load payable by the Unit Holder at actual basis to the extentof loss incurred by fund due to disinvestments if Units are redeemed by any major UnitHolder in such period of time that the Management Company believes may adverselyaffect the interest of other Unit Holder(s). Any Contingent Load received will form partof the Trust Property.

“Custodian” means a Bank, a Depository or an Investment Finance Company licensedunder the Regulations, which may be appointed by the Trustee in consultation with theManagement Company to hold and protect the Trust Property or any part thereof ascustodian on behalf of the Trustee, and shall also include the Trustee itself if it providescustodial services for the Fund.

“Cut-Off Time” / “Business Hours” means the day time for dealing in Units of the Fund.The current Cut-Off Timing/Business Hours are mentioned in Annexure “A” ofthis Offering Document.

“Dealing Day” means that Business Day on which Units will be available for dealing(purchase, redemption, transfer, switching etc) during Cut-off Time. Provided that theManagement Company may with the prior written consent of the Trustee and upongiving not less than seven days notice in two widely circulated English or Urdunewspapers in Pakistan declare any particular Business Day(s) not to be a DealingDay(s).


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“DFI” means Development Financial Institution and includes the Pakistan Industrial Creditand Investment Corporation (PICIC), the Saudi Pak Industrial and Agricultural InvestmentCompany Limited, the Pak Kuwait Investment Company Limited, the Pak Libya HoldingCompany Limited, the Pak Oman Investment Company (Pvt.) Limited, InvestmentCorporation of Pakistan, House Building Finance Corporation, Pak Brunei InvestmentCompany Limited, Pak-Iran Joint Investment Company Limited, Pak-China InvestmentCompany Limited, and any other financial institution notified under Section 3-A of theBanking Companies Ordinance, 1962.

“Distribution Account” means the Bank Account (which may be a current, saving ordeposit account) maintained by the Trustee with a Bank as directed by theManagement Company in which the amount required for distribution of income to theUnit Holder(s) shall be transferred. Interest, income or profit, if any, including thoseaccruing on unclaimed dividends, in this account shall be transferred to the mainaccount of the Fund from time to time, as part of the Trust Property for the benefit of theUnit Holder(s).

“Distributor / Distribution Company” means Company (ies), Firm(s), Sole Proprietorshipconcern(s), individual(s), Banks or any other Financial Institution appointed by theManagement Company under intimation to the Trustee for performing any or all of theDistribution Functions and who are registered with MUFAP as Registered ServiceProviders. The Management Company may itself also performs the DistributionFunction.

“Distribution Function” means the functions with regard to:

a. receiving applications for issue of Units together with the aggregate Offer Price forUnits applied for by the applicants;b. issuing receipts in respect of (a) above;c. interfacing with and providing services to the Holders including receivingredemption/transfer applications, conversion notices and applications for change ofaddress or issue of duplicate Certificates for immediate transmission to the ManagementCompany or the Transfer Agent as appropriate;d. accounting to the Management Company for all:(i) payment instruments received from the applicants for issuance of Units;(ii) payments instruments to the Holders on redemption of Units; and(iii) expenses incurred in relation to the Distribution Function.e. the above functions may be performed electronically, i f appropriatesystems are in place.

“Duties and Charges” means in relation to any particular transaction or dealing allstamp and other duties, taxes, Government charges, bank charges, transfer fees,registration fees and other duties and charges in connection with the increase ordecrease of the Trust Property or the creation, issue, sale, transfer, redemption orpurchase of Units or the sale or purchase of Investment or in respect of the issue,transfer, cancellation or replacement of a Certificate or otherwise which may havebecome or may be payable in respect of or prior to or upon the occasion of thetransaction or dealing in respect of which such duties and charges are payable, but donot include the remuneration payable to the Distribution Company or any Commissionpayable to agents on sales and redemption of Units or any Commission charges or costswhich may have been taken into account in ascertaining the Net Asset Value.

“Exposure” shall have same meanings as provided in the Regulations.

“Federal Government” means the Federal Government of Islamic Republic of Pakistan.

“Financial Institution” means a Bank, Development Finance Institution, NonBanking Finance Company, Modaraba or an institution registered under relevant lawsto provide financial services within or outside Pakistan.

“Financial Sector” shall comprise of the savings and term deposits / certificates/


51

securities/ instruments issued by the entities of Banking Sector, Financial Services Sector,Life Insurance Sector and Non- Life Insurance Sector as classified by Karachi StockExchange and DFIs.

“Force Majeure” means any occurrence or circumstance or element which delays orprevents performance of any of the terms and conditions of this Deed or anyobligations of the Management Company or the Trustee and shall include but notlimited to any circumstance or element that cannot be reasonably controlled,predicted, avoided or overcome by any party hereto and which occurs after theexecution of this Deed and makes the performance of the Deed in whole or in partimpossible or impracticable or delays the performance, including but not limited to anysituation where performance is impossible without unreasonable expenditure. Suchcircumstances include but are not limited to floods, fires, droughts, typhoons,earthquakes and other acts of God and other unavoidable or unpredictable elementsbeyond reasonable control, such as war (declared or undeclared), insurrection, civilwar, acts of terrorism, accidents, strikes, riots, turmoil, civil commotion, any act oromission of a governmental authority, failure of communication system, hacking ofcomputer system and transmissions by unscrupulous persons, closure of stockexchanges, banks or financial institutions, freezing of economic activities and othermacro-economic factors, etc.

“Formation Cost” means preliminary expenses relating to regulatory and registration feesof the Scheme, flotation expenses of the Scheme, expenses relating to authorization ofthe Scheme, execution and registration of the Constitutive Documents, legal costs,printing, circulation and publication of this Offering Document, announcementsdescribing the Scheme and all other expenses incurred until the end of the InitialPeriod.

“Front-end Load” means the Sales load which may be included in the offering price of theUnits; provided however that different levels of Front-end Load may be applied todifferent investors, as determined by the Management Company. However aggregate ofFront-end Load and Back-end Load should not exceed 3% of Net Asset Value.

“Government Securities” includes monetary obligations of the Government or aProvincial Government or a corporation wholly owned or controlled, directly orindirectly, by the Federal Government or a Provincial Government and guaranteedby the Federal Government and any other security as the Federal Governmentmay, by notification in the official Gazette, declare, to the extent determined from timeto time, to be a Government Security.

“Holder or Unit Holder” means the investor for the time being entered in the Register asowner of a Unit including investors jointly so registered pursuant to the provisions of theTrust Deed.

“Initial Period” or “Initial Offering Period” means a period determined by theManagement Company during which Units will be offered as mentioned in clause 2.6 ofthis Offering Document.

“Initial Price” or “Initial Offer” means the price per Unit on the first day of the Initial Perioddetermined by the Management Company.

“Investment” means any Authorized Investment forming part of the Trust Property.

“Investment Facilitators/Advisors” means an individual, firm, corporate or other entityappointed by the Management Company to identify, solicit and assist investors ininvesting in the Scheme. The investment facilitator/advisor is not authorized to performthe Distribution Functions. The Management Company shall compensate the InvestmentFacilitators.

“Investment Form” means a standardized form prescribed by the ManagementCompany to be duly filled by the investor to purchase Units and will be stated in this


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Offering Document.

“Net Assets”, in relation to the Trust, means, the excess of assets over liabilities of theScheme as calculated in accordance with the Regulations.

“Net Asset Value” or "NAV” means per Unit value of the Trust arrived at by dividing theNet Assets by the number of Units outstanding.

“Offer Price or Purchase (Public Offer) Price” means the sum to be paid by the investorfor purchase of one Unit, such price to be determined pursuant to this document.

“Offering Document” means the prospectus or other document (issued by theManagement Company with written consent of the Trustee and approved by theCommission) which contains the investments and distribution policy, unit structure(s) andall other information in respect of the Unit Trust, as required by the Rules and Regulationsand is circulated to invite offers by the public to invest in the Scheme.“Online” means transactions through electronic data- interchange whether real timetransactions or otherwise, which may be through the internet, intranet networks and thelike.

“Ordinance” means the Companies Ordinance, 1984.

“Par Value” means the face value of Rs. 100 for a Unit of the Fund.“Pledge Form” means a standardized form prescribed by the Management Companyto be duly filled by the investor to Pledge his/her Units and w i l l be stated inthis Offering Document.

“Provincial Governments” mean the Provincial Governments of all four provinces ofPakistan.

“Profit Distribution Date” means the date on which the Management Company decides todistribute the profits (if any).

“Redemption Form” means a standardized form prescribed by the ManagementCompany to be duly filled by the investor to redeem Units and will be stated in thisOffering Document.

“Redemption Price or Repurchase Price” means the amount to be paid to the relevantHolder upon redemption of that Unit, such amount to be determined pursuant to thisdocument.

“Registrar Function” means the functions with regard to:a. Maintaining the Register, including keeping a record of change of addresses/otherparticulars of the Holders;b. Issuing account statements to the Holders;c. Issuing Certificate, including Certificates in lieu of undistributed income to Holders;d. Cancelling old Certificates on redemption or replacement thereof;e. Processing of applications for issue, redemption, transfer and transmission of Units,recording of pledges, l iens a n d changes in the data with regard to the Holders;f. Issuing and dispatching of Certificates;g. Dispatching income distribution warrants, and bank transfer intimation anddistributing bonus Units o r p a r t l y b o t h a n d a l l o c a t i n g U n i t s to Holderson re-investment of dividends;h. Receiving a p p l i c a t i o n s f o r r e d e m p t i o n a n d transfer/transmission of Unitsdirectly from Holder or legal representatives or through Distributor;i. Maintaining record of lien/pledge/charge; andj. Keeping record of change of addresses/other particulars of the Holders.

“Regular Interval” means monthly, quarterly, half yearly or annual periods.


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“Rules” mean Non-Banking Finance Companies (Establishment and Regulation) Rules2003 as amended from time to time.

“Regulations” mean Non--Banking Finance Companies and Notified Entities Regulations,2008 and the Schedules and Forms attached to it as amended/replaced from time totime.

“SECP” or “Commission” means Securities and Exchange Commission of Pakistanestablished under Securities and Exchange Commission of Pakistan Act, 1997 and shallinclude its successor.

“Special Instruction Form” means a standardized form prescribed by the ManagementCompany to be duly filled by the investor to change his/her particulars and will bestated in this Offering Document.

“Stock Exchange” means Stock Exchanges registered under the Securities andExchange Ordinance, 1969.“Sukuk” means a type of Islamic bond that is backed by assets of the issuer that earnprofit or rent.

“Sales Load” mean Front end load and Back end load and any processing charges orCommission (excluding Duties and Charges) not exceeding three percent of NAV or asmay be allowed under the Regulations, which may be included in the offer price of allor certain type of Units or deducted from the NAV in order to determine the RedemptionPrice of certain types of Units

“Transaction Costs” means the costs incurred or estimated by the ManagementCompany to cover the costs (such as, but not restricted to, brokerage, Trusteecharges, taxes or levies on transactions, etc.) related to the investing or disinvestingactivity of the Trust’s portfolio, inter alia, necessitated by creation or cancellation ofUnits, which costs may be added to the NAV for determining the Offer Price of Units orto be deducted from the NAV in determining the Redemption Price.

“Transfer Agent” means a company including a Bank that the Management Companyshall appoint for performing the Registrar Functions. The Management Company mayitself perform the Registrar Function.

“Transfer Form” means a standardized form prescribed by the Management Companyto be duly filed by the investor to transfer Units and will be stated in this OfferingDocument.

“Trust Deed” or “Deed” means the Trust Deed of the Fund executed between theManagement Company and the Trustee along with all the exhibits appended hereto.

“Trust” or “Unit Trust” or “Fund” or “Scheme” means the Unit Trust constituted by theTrust Deed for continuous offers for sale of Units.

Words and expressions used but not defined herein shall have the meanings assigned tothem in the Act and Rules and Regulations, words importing persons includecorporations, words importing the masculine gender include the feminine gender,words importing singular include plural and words “written” or “in writing” includeprinting, engraving lithography, or other means of visible reproduction. The headingsand table of contents are for convenience only and shall not affect the construction ofthe Trust Deed.


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ANNEXURE "A"

CURRENT LEVEL OF FRONT END LOAD, MANAGEMENT FEE AND EXPENSE RATIO

Front End Load Up to 1%

(No sales load to be charged to corporates/ employee funds/Trusts/NGOs)

An AMC/Wakeel shall ensure that no sales load is charged if the investor approachesdirectly for investment or where transactions are done online through a website

Any change in the Front-end Load, Back-end Load and Management Fee structure shallbe notified through addendum

Management Fee

The Management Company shall charge a fee at the rate of 10% of the gross earnings ofthe scheme, calculated on a daily basis not exceeding the maximum rate ofremuneration permitted under the Rules and Regulations.

2 {The Fee is further subject to a minimum of 0.50% and maximum of 1.50% of averagedaily net assets of the scheme subject to guidelines as may be issued by the Commissionfrom time to time.}

Any change in the load and fee structure, provided it is within the maximum limit, shall benotified through an addendum to this annexure and/or by publication in a widelycirculated newspaper, as and how the Commission may direct.

Cut off timings:

Monday to Friday 9:00am to 4:30pm

_____________________________________________________________________________________2. Substituted vide 2nd Supplement dated April 01, 2018. Before change point read as:“The Fee is further subject to a minimum of 1% and maximum of 1.50% of average dailynet assets of the scheme subject to guidelines as may be issued by the Commission fromtime to time.”


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ANNEXURE ‘B ’

REMUNERATION OF TRUSTEE

Trustee Fee subject to review by either party. However any upward revision shall requireprior approval of SECP.

The trustee remuneration shall consist of reimbursement of actual custodial expenses /charges plus the following tariff:

Up to 1 billion 0.17% p.a. of net assets

1 to 5 billion Rs. 1.7 million plus 0.085% p.a. of net assetsexceeding Rs. 1 billion

Over 5 billion Rs.5.1 million plus 0.07% of net assets exceedingRs.5 billion


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ANNEXURE "C"Designated Distribution Outlets

Management Company of the Fund is Habib Asset Management Limited. Forms andother information of the Fund can be collected from the address of the ManagementCompany available on www.Habibfunds.com or from the branches of theDistribution Company.


1st Floor, Imperial Court, Dr. Ziauddin Ahmed Road,

Karachi, PakistanUAN: +92 21 111-D-Habib) (111-342-342)URL: www.habibfunds.com Email: [email protected]